Opponents of a mandatory payroll tax to fund Washington state’s new long-term care program filed a class action lawsuit Tuesday in federal court. The measure aims to stop the January start of the payroll premium for most employees in the state.
The law firm of Davis Wright Tremaine filed the lawsuit against Gov. Jay Inslee and other state officials, seeking a declaration that the WA Cares Act violates federal law. The attorneys assert, among other things, that the act runs afoul of the federal Employee Retirement Income Security Act of 1974, as amended.
“ERISA forbids the state from passing any law that requires employees to participate in a plan that provides sickness or medical benefits,” the law firm told McKnight’s in email.
The suit, filed with the federal court for the Western District of Washington, was filed on behalf of three businesses in the state and six individuals. None of the individuals purchased a private long-term care insurance plan before Nov. 1, the deadline to qualify for an exemption.
As McKnight’s Senior Living previously reported, under the program, all adult workers will contribute to a trust, which will pay for “a comprehensive array of long-term care services and supports,” including assisted living communities, skilled nursing facilities, in-home care and expenses such as meal delivery or construction of wheelchair ramps. Starting in 2025, the program will allow vested state residents to claim up to $36,500 to help cover these expenses. A monthly mandatory payroll tax of 58 cents on every $100 in income is scheduled to go into effect in 2022, with benefits first payable in 2025. For someone with annual wages of $100,000, that means $580 a year in premiums.
“This act is extremely unpopular and for good reason,” said Richard Birmingham, a partner at Davis Wright Tremaine, who is spearheading the suit. “In addition to placing unfair burdens on both employers and employees, the act is clearly unlawful. We are urging the court to declare the act void and unenforceable and, after such declaration, to stop employee contributions to WA Cares.”
WA Cares requires workers to pay into the system for a minimum of 10 years before collecting benefits.
“It’s simply not fair that the state is requiring me to pay premiums on a policy that I will never use,” said plaintiff John Edmundson, who plans to retire within the decade. “With this program, the state is actively taking away earnings that could help support me in retirement.”
“The state simply does not have the power to mandate an employee benefit,” said Birmingham, a nationally recognized expert in ERISA litigation.