Hollowtree
CFO / Finance

State LTC Mandate & Tax Exemption Strategy

Watch Time: 2 Mins Reading Time: 3 Mins Presented by Jeffrey Szymanski Updated May 14, 2026
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Jeffrey Szymanski

Managing Partner

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Ready to review these numbers for your organization?

Welcome to the Hollowtree executive briefing on state long-term care mandates and tax exemption strategies. In this short overview, we'll cover the key developments every CFO and benefits leader needs to understand.

Washington State's WA Cares Fund has already taken effect, imposing a 0.58% uncapped payroll tax on all W-2 employees with no employer match. This means for an employee earning $150,000, the annual cost is $870 -- deducted directly from their paycheck.

But Washington is just the beginning. New York, California, and Pennsylvania are actively developing similar mandates that could affect your workforce within the next 12 to 24 months. The legislative momentum is accelerating across state lines.

Here's the good news: employers who implement a qualifying private long-term care plan can offer employees a tax-advantaged opt-out, eliminating the state payroll deduction entirely. This is what we call a corporate carve-out strategy.

At Hollowtree, we handle 100% of carrier negotiations, plan design, and employee communications. That means zero lift for your HR team -- we manage everything from start to finish.

The window for proactive carve-out strategies is narrowing. Let's schedule a 15-minute briefing to review the numbers specific to your organization.

Quick Answer

Employers in Washington already face a 0.58% uncapped payroll tax under the WA Cares Fund, and similar mandates are advancing in New York, California, and Pennsylvania. A qualifying private LTC plan lets employees opt out of the state tax entirely, often at a lower total cost -- and Hollowtree handles 100% of the implementation.

Frequently Asked Questions

When does the Washington LTC mandate take effect?

The WA Cares Fund payroll tax began collecting on July 1, 2023 at 0.58% of wages with no income cap.

Can employees opt out with private coverage?

Yes, but the opt-out window closed on December 31, 2022 for the initial cohort. New hires have 12 months from hire date to secure a qualifying private plan.

Which other states are developing LTC mandates?

New York (Bill S1179), California (task force active), and Pennsylvania (legislative review) are all within 12-24 months of implementation.

What does a corporate carve-out cost?

Total cost varies by headcount and demographics, but most employers find the private plan costs less than the state payroll tax while providing superior benefits.

Zero Lift for Your HR Team

Hollowtree handles 100% of the implementation so your team can stay focused on what matters.

Carrier negotiations & plan design
Employee communications & enrollment
Compliance documentation & reporting
Schedule a 15-minute walkthroughBuild a program outline

About the Presenter

JS

Jeffrey Szymanski

Managing Partner

Jeff Szymanski is a Managing Partner at Hollowtree, where he leverages 30 years of elite financial experience to lead Strategy & Growth. A four-time builder of the nation’s #1 mortgage team and a nine-time Wells Fargo President’s Club recipient, Jeff has a proven track record of managing $1–$3 billion in annual funding. Now focused on Group Disability and Long-Term Care, he applies his deep expertise in market leadership to help clients architect robust protection plans. Jeff is dedicated to a strategic, results-driven approach that secures the financial well-being of the professionals and organizations we serve.

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