WA Cares Fund Exemptions: Who Qualifies?

Overview of Current Exemptions

The WA Cares Fund has several exemption categories, each with specific eligibility criteria and application requirements. Exemptions must be approved by the Washington State Employment Security Department (ESD). Claiming an exemption without ESD approval is not valid — employees cannot simply stop having withholdings without documentation.

The Closed LTC Insurance Window: What It Was

From October 1 to November 1, 2021, Washington State allowed workers who had purchased a qualifying private long-term care insurance policy to apply for a permanent, irrevocable exemption from the WA Cares Fund. The exemption was permanent — it cannot be voluntarily canceled, reversed, or transferred.

Workers who received the exemption are completely excluded from the WA Cares payroll tax forever. They receive no WA Cares benefit, but they also pay no WA Cares premium.

The window generated enormous response. An estimated 400,000+ Washington workers applied for exemptions during that single month, often purchasing minimal long-term care insurance policies specifically to qualify. The surge significantly reduced the program's projected premium revenue, prompting legislative changes to the program's structure and timeline.

If you did not apply during this window, this option is no longer available under any circumstances.

Military Spouse or Domestic Partner Exemption

Spouses and registered domestic partners of active-duty military members may apply for an exemption. The rationale is that military families frequently relocate outside Washington State and would not be able to accumulate 10 qualifying years or reliably claim the benefit.

The exemption is conditional — it remains in effect only while the qualifying military service relationship continues. If the service member separates from active duty, or if the marriage or domestic partnership ends, the exemption no longer applies and the worker becomes subject to the payroll tax.

Workers in this category must apply through the ESD and provide documentation of their qualifying relationship. The ESD processes these applications on a rolling basis.

Tribal Member Exemption

Members of federally recognized tribes may qualify for an exemption based on sovereign nation status. Tribal members working for a tribal employer are generally already excluded, but members working for non-tribal employers can apply for an individual exemption.

As with the military spouse exemption, eligibility is conditional on continued tribal membership status. Documentation requirements vary; the ESD should be consulted for current requirements.

Non-Immigrant Visa Holders

Workers in the United States on certain non-immigrant visas — including H-1B, L-1, O-1, and other work authorization categories — may apply for an exemption. The basis is that non-immigrant visa holders are unlikely to be working in Washington long enough to vest, and may be ineligible to receive the benefit even if they do contribute.

This exemption applies while the qualifying visa status is active. If a worker adjusts status to a permanent resident or citizen, the exemption no longer applies.

Employers of visa holders should be aware that the exemption is the employee's responsibility to obtain and document. Incorrect withholding without a valid exemption creates liability.

Full-Time Residents of Another State

Workers who live outside Washington State but work for a Washington employer — including remote workers — may qualify for an exemption if they are bona fide full-time residents of another state. This exemption recognizes that out-of-state workers cannot practically access Washington State long-term care benefits.

This exemption is not available to workers who live in Washington even part of the time. "Full-time residency" outside Washington must be genuine, and workers should maintain documentation of their out-of-state domicile in case of audit.

What Exemption Means for Your Long-Term Care Planning

Opting out of the WA Cares Fund via exemption does not eliminate your long-term care risk — it eliminates one specific publicly-funded option for addressing it. Workers who are exempt must plan differently:

• Self-insurance: Accumulating sufficient personal savings to cover long-term care costs out of pocket. The average nursing home stay in Washington costs over $120,000 per year; planning for 2–5 years of potential care requires significant assets.
• Private LTC insurance: The traditional product market. More flexible than WA Cares, with higher benefit options, but medically underwritten, potentially expensive, and subject to premium increases over time.
• Hybrid life/LTC products: Life insurance or annuity products with long-term care riders. More expensive upfront but provide benefit flexibility (death benefit if care isn't needed).
• Medicaid planning: For lower-income workers, eventual Medicaid eligibility may cover nursing home costs — but typically only after spending down assets, which affects estate planning.

The "right" approach depends on your health, assets, family situation, and risk tolerance. This is one area where consulting a fee-only financial advisor who specializes in retirement planning is genuinely valuable.

How to Apply for an Exemption

All current exemptions are processed through the Washington State Employment Security Department (ESD). Applications and requirements are documented at the official ESD website. Because requirements and processes can change, we recommend going directly to the source: