A new payroll deduction has been showing up on Washington paychecks since July 2023, and most employees who noticed it had one question for their employer: "What is this, and why is it not capped like Social Security?" This month, the other half of the story finally arrives. Starting July 2026, the fund that deduction feeds is paying out its first long-term care benefits — up to $36,500 per qualifying worker. If you run payroll for even one employee whose work is based in Washington, the WA Cares Fund is now a permanent line item in your compliance calendar, and getting it wrong carries real financial risk.
This guide walks through what Washington employers actually need to do: who you owe premiums for, how much to withhold, how exemptions work, what changed for 2026, and what happens if you miss a filing.
What the WA Cares Fund Actually Is
WA Cares is a state-run, employee-funded long-term care insurance program — the first of its kind in the country. Unlike Washington's Paid Family and Medical Leave program, which employers can share the cost of, WA Cares premiums are paid entirely by employees. Your role as the employer is to withhold the premium from wages, hold it, and remit it to the state on schedule. You don't owe any employer-side match, though you're allowed to cover the employee's share voluntarily if you choose to.
The premium rate is 0.58% of an employee's gross wages, and critically, there's no wage cap. Social Security taxes stop applying once an employee crosses the annual wage base; WA Cares doesn't work that way. Every dollar of covered wages is subject to the 0.58% deduction, all year, no matter how high an employee's compensation goes.
Who You Owe Premiums For
The trigger isn't where your business is headquartered — it's whether the employee's work is "localized in Washington." In practice, that means:
- Washington-based employees — covered by default, regardless of where your company is incorporated or where its main office sits.
- Remote employees who live and work in Washington — covered, even if you're an out-of-state employer with no other Washington presence.
- Employees who split work across states — generally covered if Washington is where the base of operations or the majority of the work happens.
- Employees who live outside Washington but occasionally work there — this is where it gets fact-specific, and worth a quick legal check if you have any hybrid or multi-state staff.
If any part of your workforce touches Washington, don't assume payroll software has this handled automatically — confirm your payroll provider is actually filing the combined WA Cares/Paid Leave report, not just the Paid Leave portion.
Exemptions: What's Automatic and What Isn't
Employees can be exempt from WA Cares premiums, but exemption is never something you as the employer decide unilaterally. It requires state approval, and you need the approval letter on file before you stop withholding.
Recognized exemption categories include:
- Employees who purchased qualifying private long-term care insurance before November 1, 2021
- Employees who live outside Washington
- Spouses or domestic partners of active-duty U.S. military members
- Active-duty military members working a civilian job
- Nonimmigrant visa holders on temporary work visas — as of January 1, 2026, this exemption became automatic, meaning employers should stop withholding for these employees by default unless the employee actively opts in to participate
That last change is one of the more consequential updates for 2026. If your workforce includes visa holders on temporary work authorization, review your withholding now — you may be over-collecting premiums for employees who are automatically exempt going forward, and you'll want documentation either way.
One important limit: you cannot retroactively refund premiums you failed to withhold from a non-exempt employee's past paychecks by simply skipping future withholding to compensate. Missed premiums are the employer's liability, collected during regular quarterly reporting.
How and When to Remit Premiums
WA Cares reporting rides on the same quarterly cycle as Paid Family and Medical Leave — one combined filing through the Employment Security Department (ESD) covers both programs (and, for most employers, unemployment insurance reporting too). Deadlines are:
| Quarter | Reporting Period | Due Date |
|---|---|---|
| Q1 | Jan–Mar | April 30 |
| Q2 | Apr–Jun | July 31 |
| Q3 | Jul–Sep | October 31 |
| Q4 | Oct–Dec | January 31 |
Each report requires wages, hours worked, and the premiums withheld for the quarter. Late or incomplete reports carry tiered penalties — $25, $75, or $250 depending on severity — plus 1% monthly interest on any unpaid premium. A missing report is treated as delinquent and can lock your account out of receiving your regular tax-rate notice, which creates downstream headaches for unrelated filings.
What Changes for Employees Starting July 2026
Understanding the benefit side helps you answer the questions your employees will inevitably ask now that the fund is actually paying out.
Beginning July 2026, eligible workers can access up to $36,500 in lifetime long-term care benefits (the amount is indexed to grow with inflation over time). The benefit can be used for a wide range of services: professional home care aides, payments to a qualified family member (including a spouse) who provides care, home modifications like grab bars and ramps, meal delivery, medical transportation, and assistive equipment.
To qualify, a worker has to clear two separate bars:
- A contribution threshold. There are three paths: contribute for at least 10 years for full lifetime access; contribute for 3 of the past 6 years at the time of application for full access; or, for workers born before January 1, 1968, earn a prorated 10% of the benefit for each year contributed (roughly $3,650 per qualifying year), since older workers have less time to reach the standard thresholds before needing care.
- A care-needs threshold. The applicant must be assessed as needing hands-on assistance with at least three activities of daily living — things like bathing, dressing, eating, medication management, or mobility.
Once approved, the fund pays providers directly; there's no reimbursement paperwork for the beneficiary to chase. Also new for 2026: workers who move out of Washington after contributing at least three years (with 500+ hours worked per qualifying year) can opt to keep their benefit portable if they act within a year of leaving the state — a detail worth mentioning if you have employees relocating.
A Compliance Checklist for This Quarter
- Confirm your payroll system is deducting 0.58% of gross wages with no cap, for every employee whose work is localized in Washington
- Pull your list of exemption letters on file — cross-check against employees you've stopped withholding for
- If you employ workers on temporary work visas, review whether the automatic January 2026 exemption applies and update withholding accordingly
- Verify your Q2 2026 combined report (wages, hours, WA Cares and Paid Leave premiums) is filed by July 31
- Brief your HR or payroll contact on the benefit side of the program — expect employee questions now that payouts have started
Keep Your Payroll Records Organized
Programs like WA Cares are a reminder that payroll compliance isn't a one-time setup — it's an ongoing obligation with rate changes, new exemption categories, and quarterly deadlines that shift as the program matures. Beancount.io provides plain-text accounting that gives you a clear, version-controlled record of every payroll liability and remittance, so reconciling what you withheld against what you owed the state is never a guessing game. Get started for free and see why developers and finance-savvy business owners prefer accounting they can actually audit.