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CFO / Finance
The State LTC Mandate & Tax Exemption Strategy
Watch Time: 2 Mins Reading Time: 3 Mins Presented by Hollowtree Updated April 27, 2026
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Ready to review these numbers for your organization?
Right now, every W-2 employee your company has in Washington State is losing 0.58 percent of their wages to the WA Cares Fund payroll tax -- unless they have a qualifying private LTC plan on file.
That's not future exposure. That's a current, active deduction happening on every paycheck.
New York has a bill advancing. California has finalized a task force recommendation. Pennsylvania, Minnesota, and Colorado all have mandate activity in progress. The pattern is clear: LTC payroll taxes are becoming a standard feature of multi-state employment.
For a CFO, this creates two distinct problems.
First, there's the direct employee cost. The WA Cares Fund tax is uncapped -- high earners pay more, permanently, unless they opt out with qualifying coverage. For a Washington-based executive earning $400,000, that's $2,320 a year. For a 500-person Washington workforce at an $80,000 average wage, it's $232,000 a year in aggregate employee deductions.
Second, there's the competitive cost. Employers who offer a qualifying group LTC plan give employees a path to opt out of the payroll tax. Employers who don't are effectively leaving their employees with a compensation disadvantage relative to employees at companies that have acted.
The qualifying plan is the solution to both problems. It's a deductible business expense for C-corps. It gives employees a tax-advantaged opt-out. And it creates a genuine retention benefit in states where the mandate creates urgency.
Hollowtree handles 100 percent of the implementation. Carrier negotiations, plan design, employee communications, exemption filing support -- zero additional lift for your HR team.
Book a 15-minute briefing. We'll model your exact mandate exposure and walk you through the plan options.
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Hollowtree
Insurance Specialists