If you have a job in Washington State, you’ve probably noticed a new line on your paycheck called “WA Cares Fund.” Maybe you shrugged it off. Maybe you wondered where that money goes and whether you’ll ever see any of it again. This tax pays for long-term care, and it’s one of the only programs like it in the country. Here’s what WA Cares Fund actually is, how the payroll tax works, what you get for paying into it, and whether there’s still any way to opt out.
What Is the WA Cares Fund?
WA Cares Fund is a state-run insurance program built to help pay for long-term care. Long-term care means help with everyday things like bathing, dressing, eating, or getting around the house. It also covers things like a home health aide, an assisted living facility, or a nursing home. Most people will need some kind of long-term care at some point in their life, and it’s expensive. A single year in a Washington nursing home can easily cost over $150,000. WA Cares Fund won’t cover the whole bill, but it gives you a real head start.
The program is funded by a payroll tax. Almost every W-2 employee in Washington pays into it automatically. Self-employed people and 1099 contractors aren’t required to pay, but they can choose to opt in if they want the coverage. Think of it like a small, mandatory long-term care insurance policy that comes with your job, similar in spirit to how Social Security or Medicare taxes work.
How the Payroll Tax Works
The WA Cares premium is 0.58% of your gross wages. That’s 58 cents out of every $100 you earn. There’s no wage cap, so the tax applies to all of your income, not just the first chunk of it like Social Security does. If you earn $50,000 a year, you pay about $290 a year. If you earn $200,000 a year, you pay about $1,160 a year. The tax is automatically taken out of your paycheck, so there’s nothing you need to do to pay it.
Here is a simple table showing what a few different salary levels look like over a full year and over ten years, which is roughly how long it takes most people to become fully vested in the program.
| Annual Salary | Yearly WA Cares Premium (0.58%) | Total Paid Over 10 Years |
|---|---|---|
| $40,000 | $232 | $2,320 |
| $70,000 | $406 | $4,060 |
| $100,000 | $580 | $5,800 |
| $150,000 | $870 | $8,700 |
Compare that ten-year total to the maximum lifetime benefit of $36,500, and you’ll see why plenty of people have mixed feelings about this program. For a lot of people, it’s a genuinely good deal on paper. For higher earners, it can feel like a small tax with a capped, modest payout. That’s exactly why it matters to understand how the benefit and the vesting rules actually work before you decide how you feel about it.
How Do You Qualify for Benefits?
Paying into WA Cares Fund doesn’t automatically mean you can use it. You have to “vest,” which is just a fancy word for earning your way into the program. There are two paths to get there.
- Work and pay premiums for a total of 10 years, with no gap longer than five years in a row, and work at least 500 hours in each of those years.
- Work and pay premiums for at least 3 of the last 6 years, working at least 500 hours in each of those years, if you need care sooner.
Five hundred hours works out to a little under 10 hours a week, so almost anyone working a normal part-time or full-time job will meet that bar easily. Once you’re vested, your coverage stays with you for life, even if you stop working, as long as you meet the requirements. If you haven’t vested yet and never end up needing care, the money you paid in doesn’t come back to you. It stays in the fund and helps pay benefits for others.
What Benefits Do You Actually Get?
Once you qualify and need long-term care, WA Cares Fund pays out up to $36,500 total, and you can spend it flexibly, whether that’s $100 a day, a lump sum for home modifications, or payments to a family caregiver. This lifetime cap is adjusted for inflation, so it grows gradually over time for people who claim benefits further in the future.
The benefit only covers care received while you live in Washington State. If you move out of state permanently, you lose access to it, so this is a “use it here” style benefit, not a portable insurance policy you can take with you anywhere.
For context, $36,500 sounds like a lot until you compare it to real long-term care costs. A year of in-home care in Washington can run well over $70,000, and a year in a nursing home can be double that. WA Cares Fund is meant to be a starting point, not a full solution. Most financial planners, myself included, recommend treating it as one piece of a bigger long-term care strategy rather than your only plan.
Can You Still Opt Out?
This is the question I get asked the most, so let’s be direct about it. When WA Cares Fund first launched, there was a one-time window that let you opt out permanently if you already owned a qualifying private long-term care insurance policy before November 1, 2021, and you applied for the exemption by December 31, 2022. That window has closed. If you missed it, you can’t use private insurance to opt out today, no matter how good your policy is.
There are still a handful of narrower exemptions available on an ongoing basis, though. You may qualify to opt out if any of the following apply to you.
- You live outside of Washington State but work for a Washington employer.
- You are the spouse or registered domestic partner of an active-duty U.S. military service member.
- You hold a non-immigrant work visa, such as an H-1B or H-2A visa.
- You are a veteran with a service-connected disability rating of 70% or higher from the VA.
If none of those apply to you, you’re paying into WA Cares Fund whether you like it or not, and that’s genuinely fine for most people. The smarter question at this point isn’t “how do I get out of it,” but “how do I make sure I have enough coverage on top of it.”
Building Real Long-Term Care Protection on Top of WA Cares
Since $36,500 won’t cover a real long-term care event on its own, it’s worth understanding the private options that can fill the gap. Here are the four main types people use.
Traditional Long-Term Care Insurance
This is the classic “use it or lose it” style policy. You pay a monthly premium for the rest of your life, and if you never need care, you never see that money again. It’s usually the cheapest option up front, but premiums aren’t guaranteed, and insurance companies can and do raise them over time. It also isn’t tied to a payroll tax, so it stops the moment you stop paying, unlike WA Cares Fund, which stops taking premiums once you retire.
Life Insurance With a Long-Term Care Rider
This is a permanent life insurance policy with an add-on that lets you access part of the death benefit early if you need long-term care. For example, a $300,000 policy might pay out 2% to 3% of that death benefit each month, roughly $6,000 to $9,000, while you’re receiving care. If you never need care, your family still receives the full death benefit later. Nothing is wasted either way, which is why a lot of people like this option.
Annuity-Based Long-Term Care
If you already have a lump sum of money sitting somewhere, like savings or a rollover IRA, you can place it into an annuity built to pay out enhanced long-term care benefits. Some of these products even let you use pre-tax dollars, which can be a nice bonus if the money is coming from a retirement account.
Asset-Based or Hybrid Plans
Hybrid plans blend life insurance and long-term care insurance into one policy. You choose a monthly benefit amount, and the premium is usually guaranteed not to increase. Many hybrid plans can also be paid off over a set number of years so you’re not stuck with a bill in retirement. If you never end up needing long-term care, the policy still pays a death benefit to your beneficiaries, so your premiums don’t just disappear.
Every one of these options has real tradeoffs around cost, flexibility, and what happens to your money if you never need care. The right fit depends on your age, your health, your income, and what the rest of your retirement plan already looks like. If you’d like a second opinion on where WA Cares Fund fits into your overall plan, you can schedule a personal meeting here and we’ll walk through your specific numbers together.
One more thing worth saying plainly: a lower-cost plan isn’t automatically the better plan. A cheap, bare-bones policy that saves you a little each month can leave you badly underinsured when you actually need care, while a more comprehensive plan that costs more up front often reflects real, ongoing guidance and a stronger safety net. The goal isn’t to minimize what you pay. It’s to know exactly what you’re paying for and whether it actually protects you when the time comes.
Frequently Asked Questions
Can I still opt out of WA Cares Fund with private insurance?
No. The private insurance opt-out window closed on December 31, 2022. If you didn’t apply for the exemption by that date, you can’t use a private policy to opt out today.
How much is the WA Cares payroll tax?
The premium is 0.58% of your gross wages, with no cap on how much of your income it applies to. It’s automatically withheld from your paycheck.
What is the maximum benefit from WA Cares Fund?
The lifetime maximum benefit is $36,500, adjusted for inflation over time. It can be used flexibly for approved long-term care expenses while you live in Washington State.
Do self-employed people have to pay into WA Cares Fund?
No. Self-employed workers and 1099 contractors aren’t required to pay the premium, but they can choose to opt in if they want the coverage.
Who can still qualify for an exemption today?
Ongoing exemptions are available for out-of-state workers with a Washington employer, spouses of active-duty military members, non-immigrant visa holders, and veterans with a service-connected disability rating of 70% or higher.
P.S. If you’re trying to figure out whether WA Cares Fund alone is enough, or whether you should be layering on private long-term care coverage, that’s exactly the kind of question we help people work through every week inside the free community below.
