That New Line on Your ESD Bill: What WA Cares Means for Your Payroll
If a new WA Cares balance is showing on your Washington Employment Security Department (ESD) billing statement, take a breath.
This is not automatically a penalty. It is usually a reconciliation item connected to the WA Cares premiums your business withholds from employee paychecks and reports to ESD.
The line may now appear alongside unemployment tax information on the same mailed statement. ESD is showing outstanding WA Cares balances for employers who owe $50 or more.
I know new payroll lines can create questions. What is the charge? Does the employer pay it? Was the withholding calculated correctly? Does the Social Security wage cap apply?
Let’s walk through it step by step.
What is WA Cares?
The WA Cares Fund is a Washington State long-term care insurance program. It is funded through a payroll premium.
For 2026, the WA Cares premium rate is 0.58% of an employee’s gross wages.
The program is employee-funded. This means:
The employee is responsible for the premium.
The employer withholds the premium from the employee’s paycheck.
The employer reports the wages and premium to ESD.
The employer remits the withheld amount to ESD.
The employer does not pay an employer share of the WA Cares premium.
Employers may choose to pay some or all of an employee’s share as an added benefit. However, the required WA Cares premium itself is employee-funded.
WA Cares reporting is handled through the same general ESD reporting process used for Paid Family and Medical Leave. Employers report wages and premiums with the quarterly tax and wage report.
You can review the state’s WA Cares employer information and the ESD employer responsibilities page for official guidance.
Why is WA Cares on my ESD billing statement?
ESD has started showing outstanding WA Cares balances on mailed billing statements for employers who owe $50 or more.
The statement may show the balance near other ESD amounts, including unemployment tax information. This can make the line look like a new employer tax.
It is not.
The balance generally relates to WA Cares premiums that were:
Reported but not fully remitted.
Calculated differently from the amount withheld.
Affected by a reporting correction.
Paid but not yet posted to the account.
Not yet matched to the related quarterly report.
The statement is a signal to review the account. It is not, by itself, proof that something unusual happened.
I recommend treating it as a reconciliation item. Compare your payroll records, quarterly wage reports, and ESD payment history. Once those records agree, the line should be easier to understand.
The 2026 WA Cares calculation
The basic calculation is simple:
Gross wages × 0.0058 = WA Cares premium
For example:
$3,000 in gross wages × 0.0058 = $17.40
$5,000 in gross wages × 0.0058 = $29.00
$10,000 in gross wages × 0.0058 = $58.00
The calculation applies to covered employees unless an approved exemption is on file.
WA Cares has no Social Security wage cap
This is one of the most common sources of confusion.
WA Cares does not stop at the Social Security wage cap. The 0.58% premium applies to gross wages without an upper wage limit.
That is different from programs that stop calculating payroll taxes after an employee reaches a specific annual wage base.
For example, if a covered employee receives $200,000 in gross wages during the year, the WA Cares calculation does not stop because the employee has passed the Social Security wage cap. The WA Cares premium continues to apply to covered gross wages.
Your payroll system should be configured specifically for WA Cares. Do not assume that the Social Security tax settings automatically handle this calculation correctly.
How exemptions affect withholding
Employers must withhold WA Cares premiums unless the employee has an approved exemption on file with ESD.
An employee must apply for an exemption. It is not enough for an employee to mention that they applied or believe they qualify.
When an employee provides an approved exemption letter, I recommend that you:
Review the effective date on the letter.
Keep a copy in your payroll records.
Update the employee’s payroll settings.
Stop withholding beginning on the applicable date.
Mark the employee’s exemption status correctly on the quarterly report.
The employee is responsible for notifying the employer about an approved exemption and any change in exemption status.
An exempt employee generally still needs to be included in quarterly wage reporting. The exemption status must be reported so that WA Cares premiums are not assessed for that employee.
For official exemption information, review the WA Cares exemption guidance.
A practical reconciliation checklist
If your ESD statement shows a WA Cares balance, work through these steps in order.
1. Review each 2026 payroll
For each covered employee, compare:
Gross wages.
WA Cares withholding.
Payroll dates.
Any approved exemption status.
The premium calculated at 0.58%.
Check that your payroll system is applying the premium to gross wages without a Social Security wage cap.
2. Compare payroll totals with the quarterly report
Add the WA Cares withholdings for the quarter. Compare the total with the amount reported to ESD.
Remember that small differences can sometimes result from rounding. Payroll systems may round each employee’s withholding at each pay period, while ESD may calculate the quarterly assessment using total reported wages.
The final amount on your ESD account may not match a simple addition of every paycheck down to the cent. Review the account balance after the quarterly report has been processed.
3. Review exemption records
Confirm that every employee marked exempt has an approved exemption letter on file.
Do not rely on a verbal request or an incomplete application. Check the letter’s effective date and make sure the payroll setting matches the approved status.
4. Match payments to the correct account
Review:
Payment date.
Payment amount.
Payment method.
UBI or customer account information.
The program selected for the payment.
Whether the payment has posted to ESD.
A payment may take time to appear. If a payment has not posted after more than a week, contact ESD for help.
5. Check for amended reports
An amended quarterly report can change the amount ESD assesses. Review your wage submission history and confirm that the latest report was processed successfully.
If you use a payroll provider or bookkeeper, ask for a copy of the submitted report and payment confirmation.
What if the balance looks wrong?
Do not ignore the statement. Start with your records.
If you find that the balance is correct, pay it through the appropriate ESD process and retain the confirmation.
If you believe the balance is wrong, gather:
Payroll registers.
Quarterly wage reports.
Amendment confirmations.
Employee exemption records.
Payment confirmations.
A copy of the ESD statement.
Your business name and UBI number.
Then contact ESD at paidleave@esd.wa.gov. ESD administers the reporting process for Paid Leave and WA Cares.
If your account shows an overpayment of $50 or more, and you have filed reports for all quarters, you can request a refund by email.
Use the subject line:
Refund Request
Include:
Your business name.
Your UBI number.
Your contact information.
Your mailing address.
You can also ask ESD to review a balance that appears to be caused by a payment timing issue, reporting error, or incorrect account application.
This becomes routine once payroll is set up
WA Cares may feel unfamiliar when the line first appears. The underlying process is orderly:
Calculate 0.58% of covered gross wages.
Withhold the employee-funded premium.
Track approved exemptions.
Report wages and premiums quarterly.
Remit the amount to ESD.
Reconcile the ESD account balance.
A bookkeeper can help compare payroll withholding to the quarterly wage report and ESD payment history. That review can identify small differences before they become confusing.
At Jenni’s Business Services, I focus on making financial tasks easier to follow. Clean records, consistent payroll settings, and regular reconciliations help keep one more line item in perfect order.
For more payroll recordkeeping guidance, you can also review our article on where payroll responsibility and risk actually sit.
The main point is simple: do not panic, and do not ignore the line. Review the calculation, confirm the report, match the payment, and ask for help when the records do not agree. Once the process is set up correctly, WA Cares can become a routine part of your payroll reconciliation.
Comments