Washington health trust

AN ACT Relating to the expansion and consolidation of public 1
health plans in Washington under a unified financing system in order 2
to universalize eligibility to all Washington residents, ensure 3
comprehensive medical coverage including primary care, dental, 4
vision, and prescription drug benefits, and achieve cost savings 5
through administrative efficiency, bulk pricing, and cost controls; 6
adding a new section to chapter 82.32 RCW; adding a new section to 7
chapter 82.04 RCW; adding a new chapter to Title 43 RCW; adding a new 8
chapter to Title 82 RCW; adding a new title to the Revised Code of 9
Washington to be codified as Title 50C RCW; prescribing penalties; 10
providing effective dates; providing a contingent effective date; and 11
providing contingent expiration dates. 12
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:13
Part I14
Universal Health Care for Washington State15
NEW SECTION. Sec. 101. WASHINGTON HEALTH TRUST PROTECTIONS. 16
Based on input from the department of health and the universal health 17
care commission, the legislature finds that healthy Washingtonians 18
contribute to the economic well-being of their families but suffer 19
from the greatest economic crisis since the great depression made 20
H-0653.1
HOUSE BILL 1445
State of Washington 69th Legislature 2025 Regular Session
By Representatives Parshley, Scott, Berry, Doglio, Farivar, Alvarado,
Reed, Ramel, Wylie, Goodman, Cortes, Macri, Fosse, Ormsby, Pollet,
Hill, and Simmons
Read first time 01/21/25. Referred to Committee on Health Care &
Wellness.
p. 1 HB 1445
worse by a public health crisis. Skyrocketing unemployment rates have 1
exposed the inequalities of the current private employer-based health 2
care system while causing unsustainable strain to the state's 3
medicaid system. These disparities disproportionately affect already 4
marginalized communities. With the intent to provide stable coverage 5
from time of birth and maintained as a legal guarantee to all 6
residents, the Washington legislature shall create a single unified 7
nonprofit financing entity called the Washington health trust to 8
provide reimbursements for all medical expenditures covered under the 9
program. Multiple economic analyses find that removing means testing 10
in favor of universal eligibility under a single comprehensive 11
coverage package and standardizing reimbursement rates will simplify 12
health financing, eliminate administrative waste, create more 13
equitable outcomes across the state, and guarantee all residents 14
coverage across a comprehensive set of essential health benefits 15
without the burden of premiums, deductibles, copayments, or medical 16
bills regardless of skin color, cultural identity, level of income, 17
or other socioeconomic status. 18
(1) All residents of the state of Washington are eligible for 19
coverage through this chapter. 20
(2) Individuals enrolled for essential health benefits under this 21
chapter may obtain health services from any participating 22
institution, agency, or individual qualified to provide the service 23
including participating providers outside the state.24
(3) Residents may obtain coverage for health care benefits in 25
excess of those available under the trust, including additional 26
benefits that an employer may provide to employees and their 27
dependents and spouses or to former employees and their dependents 28
and spouses. 29
(4) No person shall, on the basis of race, color, national 30
origin, age, disability, immigration status, or sex, including sex 31
stereotyping, gender identity, sexual orientation, body size, and 32
pregnancy and related medical or preexisting conditions, be excluded 33
from participation in, be denied the benefits of, or be subjected to 34
discrimination by any participating provider or any entity 35
conducting, administering, or funding a health program or activity, 36
including contracts of insurance, under this chapter.37
(5) Participating providers may not be denied reimbursement by 38
the Washington health trust for any essential health benefit that is 39
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within the scope of their practice, consistent with the accepted 1
standard of care as described in RCW 7.70.040. 2
(6) A participating health care provider is not required to 3
furnish any health care service that is outside the scope of their 4
practice or, in the health care provider's reasonable clinical 5
judgment, not consistent with the accepted standard of care as 6
described in RCW 7.70.040. 7
(7) Participating providers may receive payments from sources 8
other than the trust. However, any provider who does accept payment 9
from the trust for a service must accept that payment, along with 10
applicable copayments, as payment in full. 11
(8) Any provider, institution, agency, or individual that is 12
qualified to provide a health care service covered under this chapter 13
is entitled to participate and receive reimbursement as described in 14
section 109 of this act. 15
(9) Nothing in this chapter is intended to interfere with tribal 16
sovereignty over any federal or state funding set aside for tribal 17
health or Indian health services, including those provided by chapter 18
43.71B RCW. 19
NEW SECTION. Sec. 102. DEFINITIONS. The definitions in this 20
section apply throughout this chapter unless the context clearly 21
requires otherwise.22
(1) "Board" means the Washington health trust board of trustees 23
created in section 104 of this act. 24
(2) "Body size" means any measurement, ratio, proportions, or 25
composition of weight, height, length, width, circumference, or body 26
fat on any parts of the body and applies whether perceived as fat, 27
tall, thin, or short or measured numerically. 28
(3) "Chair" means the presiding officer of the board.29
(4) "Community health access" means a reimbursement system 30
managed by the health care authority for eligible residents to 31
receive essential health services free to the individual at the point 32
of service through community health providers. 33
(5) "Community health provider" means a qualified provider 34
electing participation in the trust as a coordinating nonprofit 35
health care provider to negotiate reimbursements based on quality and 36
availability of services for residents in each regional health 37
district as described in section 109 of this act. 38
(6) "Department" means the Washington state department of health.39
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(7) "Eligible nonresident" shall be defined by the board of 1
trustees created in section 104 of this act, and includes nonresident 2
students attending college within the state, nonresidents employed 3
within the state, and the spouses or domestic partners and dependents 4
of eligible nonresidents. 5
(8)(a) "Employee" means an individual who is in the employment of 6
an employer. 7
(b) "Employee" does not include employees of the federal 8
government. 9
(9) "Employer" has the meaning provided in section 201 of this 10
act. 11
(10) "Employment investment" means a cost paid by or on behalf of 12
employed individuals for enrollment in the Washington health trust.13
(11) "Essential benefits package" means a single comprehensive 14
health insurance that covers essential health benefits.15
(12) "Essential health benefits" means any of the following items 16
and services provided on an inpatient or outpatient basis when 17
medically necessary or appropriate for the maintenance of health or 18
for the diagnosis, treatment, or rehabilitation of a health 19
condition: 20
(a) Hospital services, including inpatient and hospital-based 21
outpatient care and 24-hour emergency services; 22
(b) Ambulatory primary and specialty services, including 23
preventative care and chronic disease management; 24
(c) Prescription drugs, medical devices, and biological products;25
(d) Mental health and substance use disorder treatment services;26
(e) Laboratory and other diagnostic services, including 27
diagnostic imaging services; 28
(f) Reproductive, maternity, and newborn care;29
(g) Pediatric primary and specialty care; 30
(h) Palliative care and end-of-life care services;31
(i) Oral health, audiology, and vision services;32
(j) Short-term rehabilitative and habilitative services and 33
devices; and 34
(k) Licensed naturopathic, acupuncture, and massage therapies.35
(13) "Essential health benefits-benchmark plan" means the set of 36
benefits that an issuer must include in nongrandfathered plans 37
offered in the individual or small group market in Washington state, 38
as defined in section 1302 of the affordable care act, 124 Stat. 119, 39
P.L. 111–148 (2010), and 45 C.F.R. 156.100. 40
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(14) "Federal poverty level" means the federal poverty guidelines 1
determined annually by the United States department of health and 2
human services or its successor agency. 3
(15) "Global annual budget" means the specific amount of money 4
required for health care facilities participating for reimbursement 5
as a community health provider to operate as negotiated by the board.6
(16) "Health care facility" or "facility" includes any of the 7
following appropriately accredited entities: Hospices and home health 8
agencies licensed pursuant to chapter 70.127 RCW; hospitals licensed 9
pursuant to chapter 70.41 RCW; rural health care facilities as 10
defined in RCW 70.175.020; psychiatric hospitals licensed pursuant to 11
chapter 71.12 RCW; nursing homes licensed pursuant to chapter 18.51 12
RCW; community mental health centers licensed pursuant to chapter 13
71.05 or 71.24 RCW; kidney disease treatment centers; ambulatory 14
surgical facilities licensed under chapter 70.230 RCW; approved drug 15
and alcohol treatment facilities certified by the department of 16
social and health services; such other facilities owned and operated 17
by a political subdivision or instrumentality of the state; a 18
tribally operated facility as defined in RCW 43.71B.010; and such 19
other facilities as required by federal law and implementing 20
regulations. 21
(17) "Income" means the adjusted gross household income for 22
federal income tax purposes. 23
(18) "Long-term care" means institutional, residential, 24
outpatient, or community-based services that meet the individual 25
needs of persons of all ages who are limited in their functional 26
capacities or have disabilities and require assistance with 27
performing two or more activities of daily living for an extended or 28
indefinite period of time. These services include case management, 29
protective supervision, in-home care, nursing services, convalescent, 30
custodial, chronic, and terminally ill care. 31
(19) "Native American" means an American Indian or Alaska Native 32
as defined under 25 U.S.C. Sec. 1603. 33
(20) "Participating provider" means a person, health care 34
provider, practitioner, health care facility, or entity acting within 35
their scope of practice that has negotiated a written contract to 36
participate and receive reimbursement as described in section 109 of 37
this act. 38
(21) "Qualified provider" means a person, health care provider, 39
practitioner, health care facility, or entity acting within their 40
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scope of practice who is licensed or certified and meets: (a) All the 1
requirements of state law to provide such services in the state where 2
the services are provided; and (b) applicable requirements of federal 3
law to provide such services. "Qualified provider" includes a 4
licensed or certified hospital, clinic, health maintenance 5
organization, or nursing home or an officer, director, employee, or 6
agent thereof acting in the course and scope of their employment.7
(22) "Reimbursement accounts" means health care accounts with 8
funds that can be used for essential health benefits incurred by 9
residents and eligible nonresidents with health insurance coverage 10
other than the trust for copayments and out-of-pocket costs.11
(23) "Resident" means an individual who presents evidence of 12
established permanent residency in the state of Washington and meets 13
residency requirements consistent with RCW 46.16A.140. "Resident" 14
also includes people and their accompanying family members who are 15
residing in the state for the purpose of engaging in employment for 16
at least one month. The confinement of a person in a nursing home, 17
hospital, or other medical institution in the state may not by itself 18
be sufficient to qualify such person as a resident.19
(24) "Revocable expenditure" means a health care expenditure that 20
an employer allocated for use by a covered employee but not actually 21
paid to the employee, or any amount actually paid to a third-party 22
administrator that could revert to the employer at any point. Funds 23
do not have to revert to the employer for the health care expenditure 24
to be revocable. Rather, the entire expenditure is considered 25
revocable if there is the possibility that any or all of it could be 26
returned to the employer, such as flexible spending accounts.27
(25) "Trust" means the Washington health trust created in section 28
103 of this act. 29
NEW SECTION. Sec. 103. WASHINGTON HEALTH TRUST. The Washington 30
health trust is created within the department. The purpose of the 31
trust is to provide coverage for a set of essential health benefits 32
to all Washington residents. Each person and entity charged under 33
this act with any responsibility to establish, implement, guide, or 34
in any other way to promote the creation of the Washington health 35
trust shall exercise due diligence and good faith in ensuring that 36
the Washington health trust is established as quickly and securely as 37
reasonably possible.38
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NEW SECTION. Sec. 104. THE BOARD OF TRUSTEES. (1) The trust 1
must be governed by a board of trustees consisting of 17 members with 2
expertise in health care financing and delivery and representing 3
Washington citizens, business, labor, and health professions and 4
fully established no later than May 15, 2026. Trustees must include 5
individuals with knowledge of the health care needs of diverse 6
populations, including low-income, Native American, undocumented, 7
non-English speaking, disabled, rural, incarcerated, other minority 8
populations, and populations with body size issues. Members of the 9
board must have no pecuniary interest in any business subject to 10
regulation by the board.11
(2) The board shall be comprised of the following trustees:12
(a) The secretary of the department of health, or the secretary's 13
designee; 14
(b) The director of the health care authority, or the director's 15
designee; 16
(c) The insurance commissioner, or the commissioner's designee;17
(d) The director of the office of equity, or the director's 18
designee; 19
(e) The governor shall appoint: 20
(i) For trustees, one each selected from a list of five nominees 21
who are not legislators submitted by the two largest caucuses of the 22
house of representatives and senate; 23
(ii) Nine trustees selected using an equity lens, with knowledge 24
and experience regarding health care coverage, access, and financing, 25
or other relevant expertise, including at least one consumer 26
representative, at least one invitation to an individual representing 27
organized labor, and at least one invitation to an individual 28
representing tribal governments with knowledge of the Indian health 29
care delivery in the state. 30
(3) The governor shall appoint the chair of the board from any of 31
the trustees identified in subsection (2) of this section. The board 32
shall elect its own chair from its members upon the expiration of the 33
term of the initial chair or his or her departure from the board. The 34
term of a chair elected by the board expires upon the expiration of 35
his or her term on the board. 36
(4) A trustee whose term has expired or who otherwise leaves the 37
board must be replaced by gubernatorial appointment under the same 38
framework of their original nomination, designation, or appointment 39
process outlined in subsection (2) of this section. When the person 40
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leaving was nominated by one of the caucuses of the house of 1
representatives or the senate, their replacement must be appointed 2
from a list of five nominees submitted by that caucus within 30 days 3
after the vacancy occurs. If the caucus fails to submit the list of 4
nominees or if the nominees do not meet the qualifications specified 5
in subsection (1) of this section, the governor shall appoint a 6
trustee meeting the qualifications specified in subsection (1) of 7
this section at the governor's discretion. A person appointed to 8
replace a trustee who leaves the board before the expiration of their 9
term shall serve only the duration of the unexpired term.10
(5) If convinced by a preponderance of the evidence in a due 11
process hearing that a trustee has failed to perform required duties 12
or has a conflict with the public interest, the governor may remove 13
that trustee and appoint another to serve the unexpired term.14
(6) Members of the board are subject to chapter 42.52 RCW.15
(7) The trustees occupy their positions according to the bylaws, 16
rules, and relevant governing documents of the board and are exempt 17
from chapter 41.06 RCW. The board and its professional staff are 18
subject to the public disclosure provisions of chapter 42.17A RCW. 19
Trustees shall be paid a salary to be fixed by the governor in 20
accordance with RCW 43.03.040. A majority of the board constitutes a 21
quorum for the conduct of business. 22
NEW SECTION. Sec. 105. ADVISORY COMMITTEES. (1) Subject to the 23
approval of the board, the chair shall appoint three standing 24
advisory committees:25
(a) A finance committee consisting of financial experts from the 26
office of financial management, the office of the state treasurer, 27
the employment security department, and the office of the insurance 28
commissioner. The finance committee shall recommend specific details 29
for major budget decisions and for appropriations, taxes, and other 30
funding legislation necessary to conduct the operations of the trust;31
(b) A citizen committee consisting of balanced representation 32
from people with relevant knowledge in health, business, labor, 33
tribal governments, disability needs, body size, and consumers, 34
specifically including representation from populations where health 35
care disparities are known to exist as described in section 107 of 36
this act. The citizen committee shall hold public hearings on 37
priorities for inclusion in the set of health services to be offered 38
through the trust, survey public satisfaction, investigate 39
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complaints, and identify and report on health care access and other 1
priority issues for residents; and 2
(c) A provider committee consisting of members with broad 3
experience in and knowledge of health care delivery, research, and 4
policy, as well as public and private funding of health care 5
services. The provider committee shall make recommendations to the 6
board on issues related to scope of covered benefits, quality 7
improvement, continuity of care, resource utilization, and other 8
issues as requested by the board. 9
(2) The board shall consult with the citizen committee at least 10
quarterly, receive its reports and recommendations, and then report 11
to the governor and legislature at least annually regarding board 12
actions in response to citizen committee recommendations. The board 13
shall regularly seek financial recommendations from the finance 14
committee to establish and maintain the trust solvency. The board 15
shall consult with the provider committee to promote development of 16
policy and procedures for administration of reimbursements, 17
negotiations for reimbursements, and related documentation.18
(3) Subject to approval of the board, the chair may appoint other 19
committees and task forces as needed. 20
(4) Members of committees shall receive compensation for their 21
services and shall be reimbursed for their expenses while attending 22
meetings on behalf of the board in accordance with RCW 43.03.250.23
NEW SECTION. Sec. 106. AUTHORITIES OF THE BOARD CHAIR. The 24
chair is the presiding officer of the board and has the following 25
powers and duties:26
(1) Appoint an executive director with the approval of the board;27
(2) Enter into contracts on behalf of the board. All contracts 28
are subject to review and binding legal opinions by the attorney 29
general's office if disputed in a due process hearing by a party to 30
such a contract; 31
(3) Subject to explicit approval of a majority of the board, 32
accept and expend gifts, donations, grants, and other funds received 33
by the board; and 34
(4) Delegate administrative functions of the board to the 35
executive director and trust staff as necessary to ensure efficient 36
administration. 37
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NEW SECTION. Sec. 107. RESPONSIBILITIES OF THE BOARD. (1) With 1
advice from the citizen committee and the provider committee, the 2
board shall:3
(a) Establish a single comprehensive benefits package covering 4
essential health benefits to be financed by the trust, as provided in 5
section 108 of this act; 6
(b) Subject to the funding mechanisms established under this 7
chapter, seek all applicable waivers, state plan amendments, or 8
demonstration project approvals, so that current federal and state 9
payments for health services to residents will be paid directly or 10
are made otherwise available to the trust; 11
(c) Prior to full integration of federally qualified trust funds 12
into the trust, establish at their discretion any premiums necessary 13
to operate the trust and make rules, policies, guidelines, and 14
timetables needed for the trust to finance the essential benefits 15
package for residents starting November 1, 2026; 16
(d) Develop or contract for development of a statewide, anonymous 17
health care data system; 18
(e) Develop health care practice guidelines and quality standards 19
for the trust; 20
(f) Develop policies to protect confidentiality of patient's 21
records throughout the health care delivery system and the claims 22
payment system; 23
(g) Make rules for eligible nonresidents; 24
(h) Develop or contract for development of an efficient 25
enrollment mechanism for all who are eligible; 26
(i) Develop or contract for development of a streamlined uniform 27
claims processing system that must pay providers in a timely manner 28
for covered health services; 29
(j) Develop appeals procedures for residents and providers;30
(k) Integrate functions with other state agencies;31
(l) Work to balance benefits and provider payments with revenues, 32
and develop effective measures to control excessive and unnecessary 33
health care costs; 34
(m) Implement policies to ensure that all Washingtonians receive 35
culturally, linguistically, and structurally competent care and 36
address nonfinancial barriers to health care access including 37
developing specific goals and plans and identifying and addressing 38
the needs of vulnerable populations that are most susceptible to 39
health care disparities, particularly targeting disease prevention 40
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and health promotion and medical, mental/behavioral health, and 1
public health issues that disproportionately affect the diverse 2
populations where disparities are known to exist, in order to ensure 3
equitable, appropriate, effective, safe, and high quality care for 4
all, with no gaps in services based on any medically irrelevant 5
factor; 6
(n) Develop an annual trust budget; and 7
(o) Research and recommend the possible benefits of administering 8
the trust through a public nonprofit corporation that would be 9
authorized by the trust board to perform all the administrative and 10
implementation duties of the health care trust. 11
(2) To the extent that the exercise of any of the powers and 12
duties specified in this section may be inconsistent with the powers 13
and duties of other state agencies, offices, or commissions, the 14
authority of the board supersedes that of such other state agency, 15
office, or commission. 16
NEW SECTION. Sec. 108. COMPREHENSIVE ESSENTIAL HEALTH BENEFITS 17
PACKAGE. (1) The board shall establish a single comprehensive 18
essential benefits package covering essential health benefits that 19
are effective and necessary for the good health of residents and that 20
emphasize preventive, primary, and integrated health care. The board 21
shall ensure that the essential benefits package constitutes coverage 22
at least as comprehensive as the minimum essential coverage for 23
purposes of the federal patient protection and affordable care act.24
(2) The board and the department shall, on an ongoing and regular 25
basis, evaluate whether the essential health benefits should be 26
improved or adjusted to promote the health of beneficiaries, account 27
for changes in medical practice or new information from medical 28
research, or respond to other relevant developments in health 29
science, and shall make recommendations to the legislature regarding 30
any such improvements or adjustments. 31
(3) Subject to a financial analysis demonstrating ongoing 32
sufficient funds in the trust, long-term care shall be a covered 33
benefit on January 1, 2029. Long-term care coverage shall include a 34
uniform initial assessment and coordination between home health, 35
adult day care, and nursing home services, and other treatment 36
alternatives. The board may establish a copayment for long-term 37
nursing home care, to cover some costs of room and board, for 38
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residents with household incomes above 150 percent of the federal 1
poverty level. 2
(4) Nothing in this act shall be deemed to permit exclusion or 3
limitation of services to any person on the basis that the service is 4
sought to address a preexisting medical condition. 5
(5) The board must establish: 6
(a) A long-term care benefits package; and 7
(b) Eligibility requirements at least as inclusive as the 8
medicaid standards for Washington on the effective date of this 9
section. 10
(6) When the board establishes a long-term care benefits package 11
beyond what is described in subsection (5) of this section, the 12
board, in coordination with the office of the insurance commissioner, 13
shall examine possible remedies for residents who have made previous 14
payments for long-term care insurance. 15
(7) The board shall submit to the governor and legislature by 16
December 1, 2026, and by December 1st of the following years:17
(a) The essential benefits package; and 18
(b) An actuarial analysis of the cost of the package.19
NEW SECTION. Sec. 109. PARTICIPATING PROVIDERS. (1) The board, 20
in coordination with the health care authority, shall adopt rules and 21
mechanisms permitting qualified providers to collectively negotiate 22
budgets, payment schedules, and other terms and conditions of trust 23
participation.24
(2) The board, in coordination with the health care authority and 25
on an annual basis, shall collectively negotiate reimbursement rates 26
with qualified providers not participating as community health 27
providers on a fee-for-service basis. 28
(3) Any qualified provider operating as a public hospital or 29
health care facility or public or private nonprofit 501 (c) 30
organization with three or more individual practitioners coordinating 31
to deliver essential health benefits shall participate as a community 32
health provider and will negotiate their reimbursement through the 33
global budgeting process. Any funds from the operating budget not 34
spent at the end of a fiscal year shall be applied to the next year's 35
budget. Retained earnings year-to-year shall be prohibited.36
(4) The board, in coordination with the health care authority, 37
shall annually negotiate with each community health provider a 38
prospective global budget for operational and other costs to be 39
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covered by the trust. Hospitals and other health care facilities 1
shall be paid on a fee-for-service basis, within the limits of their 2
prospective global annual budget. Individual practitioners who are 3
employed by a community health provider may be paid by salary.4
(5) The board shall make appropriate considerations and 5
recommendations during biannual negotiations with community health 6
providers including: 7
(a) Health needs of residents in each regional health district in 8
the state; 9
(b) The scope of services offered by the provider;10
(c) Quality and effectiveness of care standards and safety 11
policies utilized by the provider; 12
(d) Quality of employment for those employed by the provider; and13
(e) Provider coordination with the department of social and 14
health services on delivery of needs-based assistance for which 15
residents in the regional health district are eligible.16
(6) The board shall adopt rules ensuring that payment schedules 17
and procedures for mental health services are comparable to other 18
health care services included in the essential benefits package.19
(7) The board shall adopt rules ensuring that payment schedules 20
for care provided via telemedicine, as defined in RCW 70.41.020, are 21
at parity levels with equivalent care provided in person.22
(8) The board shall study and develop provider payment methods 23
that: 24
(a) Encourage an integrated multispecialty approach to disease 25
management and prevention to support care of patients needing 26
specialized care within primary care practices. Payment of 27
independent licensed professionals on the basis of capitation shall 28
not be allowed; 29
(b) Reward education time spent with patients; and30
(c) Include all categories of providers pursuant to rule and RCW 31
48.43.715. 32
NEW SECTION. Sec. 110. PHARMACEUTICALS, MEDICAL EQUIPMENT, AND 33
BIOLOGICALS. (1) When consistent with federal law, the prices to be 34
paid for covered pharmaceuticals, medical supplies including 35
biological products, and medically necessary assistive equipment 36
shall be negotiated annually by the board for all residents and 37
eligible nonresidents enrolled in the trust.38
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(2)(a) The board shall establish a prescription drug formulary 1
system, which: 2
(i) Encourages best practices in prescribing; 3
(ii) Discourages the use of ineffective, dangerous, or 4
excessively costly medications when better alternatives are 5
available; 6
(iii) Promotes the use of generic medications to the greatest 7
extent possible; and 8
(iv) Does not interfere with treatments necessary for appropriate 9
standards of care. 10
(b) The formulary shall be updated frequently, with advice from 11
clinicians and patients, to add new pharmaceuticals or remove 12
ineffective or dangerous medications from the formulary.13
(3) The board shall develop rules for off-formulary medications 14
which allow for patient access without compromising the formulary.15
(4) The board may seek other means of financing drugs and durable 16
medical equipment at the lowest possible cost, including bulk 17
purchasing agreements with Washington state tribes.18
(5) The board may set a cost-sharing schedule for prescription 19
drugs and biological products for enrolled individuals that: (a) Is 20
evidence-based and encourages the use of generic drugs; (b) does not 21
apply to preventive drugs; and (c) does not exceed $250 annually, 22
adjusted annually for inflation. 23
NEW SECTION. Sec. 111. ENROLLMENT ELIGIBILITY. (1) Residents:24
(a) Under the age of 19; or 25
(b) With dual eligibility for medicare and medicaid;26
are exempt from the employment investment established under 27
subsection (2) of this section for enrollment in the Washington 28
health trust and the self-employment investment for enrollment in the 29
trust. 30
(2) When a resident is employed, an employment investment must be 31
paid by the resident or their employer for enrollment in the trust 32
except as provided in subsection (1) of this section. The employment 33
investment is equal to total required health care expenditures 34
employers must pay to or on behalf of the employee as established in 35
section 202 of this act. 36
(3) Until full integration of federally qualified trust funds is 37
accomplished, residents, including but not limited to Native American 38
residents, who are covered under federal health programs shall 39
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continue to use that coverage, and additional benefits provided by 1
the trust shall extend only to costs not covered by the federal 2
health programs when, subject to subsection (1) of this section:3
(a) The resident voluntarily elects to enroll in the trust; and4
(b) The resident's wages and net earnings are considered in 5
calculating either the employment or self-employment investment 6
established under this section. 7
(4) Pending full integration of federally qualified funds into 8
the trust, residents who are retirees are eligible for coverage 9
through the trust when they elect the trust coverage as their 10
medicare supplemental or part C plan. The board shall make rules and 11
adopt mechanisms to reimburse residents with household incomes below 12
300 percent of the federal poverty level for all medicare eligible 13
residents who elect to enroll in the trust for medicare premiums the 14
individual pays while enrolled in the trust until a federal waiver or 15
demonstration project approval as applicable is granted integrating 16
the federally qualified trust funds into the trust.17
NEW SECTION. Sec. 112. COVERAGE USE AND AVAILABILITY. (1) If an 18
enrolled individual has other health insurance coverage for any 19
essential health benefits provided in the state, the trust benefits 20
provided in this chapter are secondary to that insurance coverage. 21
Nonresidents are covered for emergency services and emergency 22
transportation only, except when the individual is an eligible 23
nonresident and enrolled in the trust for coverage as provided in 24
section 102(7) of this act.25
(2) The board shall make provisions for determining 26
reimbursements for covered medical expenses for residents while they 27
are out of the state. 28
(3) No cost sharing, including deductibles, coinsurance, 29
copayments, or similar charges, may be imposed on an enrolled 30
individual for any benefits provided under this chapter, except:31
(a) Cost sharing may be contingent on the inclusion of long-term 32
care coverage beyond what is provided under medicaid; and33
(b) As provided in section 110 of this act. 34
(4) No cost sharing, including deductibles, coinsurance, 35
copayments, or similar charges, may be imposed on enrolled:36
(a) Persons under the age of 19; 37
(b) Residents who are dual eligible medicare and medicaid 38
beneficiaries; or 39
p. 15 HB 1445
(c) Adults whose household income is under 300 percent of the 1
federal poverty level. 2
(5) By October 1, 2026, the board must take all steps necessary, 3
including seeking appropriate approvals from federal entities, to 4
ensure the essential benefits package qualifies as an essential 5
health benefits-benchmark plan for the purposes of contracting to 6
administer all essential health benefits with the following entities 7
as a managed health care system: 8
(a) The health care authority; 9
(b) The public employees' benefits board; 10
(c) Indian health services; 11
(d) Center for medicare and medicaid services;12
(e) The department of social and health services; and13
(f) Any other director, entity, or agency with authority to 14
contract administration of essential health benefits to a managed 15
health care system operating in Washington state. 16
(6) By October 1, 2026, the board shall establish necessary 17
premiums and cost-sharing requirements for eligible individuals 18
enrolled in the program through the Washington health benefits 19
exchange, collect premium and assessment payments from all enrolled 20
eligible individuals, and deposit premium payments in the benefits 21
account created in section 122 of this act. If the eligible 22
individual qualifies for premium subsidies or cost-sharing reductions 23
under the patient protection and affordable care act, the premium or 24
cost-sharing amounts established under this subsection may not exceed 25
the amounts the eligible individual would have paid if they had 26
enrolled in a silver level qualified health plan through the 27
Washington health benefit exchange. The portion of premiums, copays, 28
and out-of-pocket costs enrollees are responsible for after eligible 29
premium subsidies or cost-sharing reductions are applied must be 30
consistent with this section. 31
(7) On or before November 1, 2027, the board shall:32
(a) Begin offering coverage to all residents and eligible 33
nonresidents; 34
(b) Contract with all entities in subsection (5) of this section 35
for enrollment of residents who are eligible for essential health 36
benefits coverage through a federal or federally funded state health 37
program, except when contingent on approval for full integration of 38
federally qualified trust funds into the trust; 39
p. 16 HB 1445
(c) Ensure the operation of the trust is consistent with this 1
chapter; and 2
(d) Enable the state to provide equitable coverage for all 3
enrolled, including those covered through medicaid and medicare, and 4
maximize the use of appropriate federal funding in the trust.5
(8) The board shall not contract the administration of covered 6
benefits for an individual enrolled in the trust to a managed health 7
care system operating for-profit except when the enrolled individual:8
(a) Is enrolled in supplemental health insurance coverage through 9
the managed health care system; and 10
(b) Has elected the benefits administration through the managed 11
health care system. 12
NEW SECTION. Sec. 113. INTEGRATION OF FEDERAL HEALTH COVERAGE 13
PROGRAMS. (1) The health care authority shall determine which state 14
and federal laws affect full integration of federally qualified trust 15
funds into the trust, and report its recommendations for 16
accomplishing such full integration, with any proposed revisions to 17
the Revised Code of Washington, to the governor and the appropriate 18
committees of the legislature by the first date following the 19
effective date of this section.20
(2) The governor, in consultation with the board and the health 21
care authority, shall take the following steps in an effort to 22
receive applicable waivers, state plan amendments, exemptions, or 23
approval for demonstration projects from federal agencies in order to 24
fully integrate coverage and funding available through federally 25
qualified trust funds into the trust under this chapter:26
(a) Negotiate with the federal department of health and human 27
services' health care financing administration to obtain a statutory 28
or regulatory waiver of provisions of the medical assistance statute, 29
Title XIX of the federal social security act and the children's 30
health insurance program including, but not limited to, application 31
for an applicable demonstration project; 32
(b) Negotiate with the federal department of health and human 33
services to obtain a statutory or regulatory waiver of provisions of 34
the medicare statute, Title XVIII of the federal social security act, 35
that currently constitute barriers to full integration of this 36
chapter or to obtain approval for the trust to operate as a medicare 37
part C plan or other demonstration project allowing relevant federal 38
funds to flow into the trust; 39
p. 17 HB 1445
(c) Negotiate with the federal department of health and human 1
services to obtain any statutory or regulatory waivers of provisions 2
of the United States public health services act, or applicable 3
demonstration project, necessary to ensure integration of federally 4
funded community and migrant health clinics and other health services 5
funded through the public health services act into the trust system 6
under this chapter; 7
(d) Negotiate with the federal office of personnel management for 8
the inclusion of federal employee health benefits in the trust under 9
this chapter; 10
(e) Negotiate with the federal department of defense and other 11
federal agencies for the inclusion of the civilian health and medical 12
program of the uniformed services in the trust under this chapter; 13
and 14
(f) Request that the United States congress amend the internal 15
revenue code to treat the assessments and any premiums established 16
under this chapter as fully deductible from adjusted gross income.17
(3) Beginning November 15, 2026, the health care authority shall 18
submit annual progress reports to the appropriate legislative 19
committees regarding the development of the waiver or demonstration 20
project applications, or other integration measures, and on 21
enrollment of residents into health coverage managed by the health 22
care authority, an entity within the health care authority, or the 23
trust. The report submitted on November 15, 2027, must include a list 24
of any statutory changes necessary to implement full integration of 25
federally qualified trust funds into the trust. 26
(4) Upon receipt of any waiver or approval for other integration 27
measures under this chapter, the health care authority shall promptly 28
notify in writing the office of the code reviser, the governor, and 29
the appropriate committees of the legislature. 30
(5) Beginning no later than four years after the effective date 31
of this section, the health care authority, including entities or 32
agencies within the health care authority, shall not contract 33
administration of essential health benefits available through the 34
trust to a managed health care system operating for-profit except 35
when the enrolled individual: 36
(a) Is also enrolled only in supplemental health insurance 37
coverage through the managed health care system; and38
(b) Has elected the benefits administration through the managed 39
health care system. 40
p. 18 HB 1445
(6) The health care authority, in coordination with the board and 1
all other agencies within the state, shall take all steps necessary 2
to align reimbursement rates for essential health benefits provided 3
through a program managed by the health care authority or an agency 4
within the state. 5
NEW SECTION. Sec. 114. TRANSITIONAL EMPLOYMENT PROVISIONS. (1) 6
Employers with employees represented by a union and with established 7
health benefit plans negotiated before the effective date of this 8
section:9
(a) Shall maintain health benefits at least as comprehensive and 10
affordable to covered employees and retired employees after the 11
effective date of this section; and 12
(b) Are exempt from owing the required health care expenditures 13
established in section 202 of this act, including the employee share, 14
for each employee offered affordable minimum essential coverage, 15
defined by the patient protection and affordable care act, through 16
the existing employee health benefit plan until a supplemental health 17
benefit plan is negotiated and becomes effective. 18
(2) Resident employees of Washington employers and enrolled in a 19
health benefit plan described in subsection (1) of this section may:20
(a) Participate in the Washington health trust by paying the 21
employment investment, subject to the exclusions in section 111 of 22
this act, to enroll in the trust's essential benefits package as a 23
primary health insurance. Any amount paid to the employment security 24
department on behalf of an employee and not used to reimburse medical 25
expenses for the employee may be applied to the employment investment 26
for enrollment in the Washington health trust at the time the 27
resident employee elects enrollment; or 28
(b) Participate in the health options program defined in section 29
127 of this act. 30
(3) All sole proprietors operating in the state may apply for an 31
exemption from the self-employment contribution established in 32
section 203 of this act if the individual is enrolled in minimal 33
essential coverage, as defined by the patient protection and 34
affordable care act. 35
(4) This section is subject to section 126 of this act and 36
expires on the first January 1st following the effective date of 37
section 115 of this act. 38
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NEW SECTION. Sec. 115. ENROLLMENT CONDITIONAL PROVISIONS. 1
Within one year of the effective date of this section:2
(1) Subject to ongoing sufficient funding, the board shall work 3
to reduce deductibles and out-of-pocket costs for all enrolled adults 4
to the fullest extent possible; and 5
(2) The Washington state health care authority shall apply for a 6
waiver from the provisions of the federal patient protection and 7
affordable care act, P.L. 111-148, as amended by the federal health 8
care and education reconciliation act, P.L. 111-152, to:9
(a) Consolidate all state and federal funding of plans on the 10
Washington health benefit exchange established in chapter 43.71 RCW 11
into the Washington health trust; and 12
(b) Enable the state to receive appropriate federal funding in 13
lieu of the federal premium tax credits, federal cost-sharing 14
subsidies, and other federal payments and tax credits that will no 15
longer subsidize private plans sold on the Washington health benefit 16
exchange. The health care authority may use existing health benefit 17
exchange resources to facilitate residents' ability to compare and 18
purchase supplemental health insurance. 19
NEW SECTION. Sec. 116. ADMINISTRATIVE COST CONTROLS. (1) 20
Administrative expenses to operate and maintain the trust shall not 21
exceed seven percent of the trust's annual budget. The board shall 22
not shift administrative costs or duties of the trust to providers or 23
to resident beneficiaries.24
(2) The board shall work with providers to develop and apply 25
scientifically based utilization standards, to use encounter and 26
prescribing data to detect excessive utilization. 27
(3) The department shall develop due processes for enforcing 28
appropriate utilization standards, and to identify and prosecute 29
fraud that includes: 30
(a) Anonymous reporting of any suspected waste, fraud, and abuse; 31
and 32
(b) An appeals process. 33
(4) The board may institute other cost-containment measures in 34
order to maintain a balanced budget. The board shall pursue due 35
diligence to ensure that cost-containment measures neither limit 36
access to clinically necessary care or infringe upon legitimate 37
clinical decision making by practitioners or the legitimate decisions 38
of an enrolled individual to receive prescribed essential health 39
p. 20 HB 1445
benefits. Cost-containment measures may not be achieved through 1
discrimination, including denial, delay, or limitation of services 2
based on any category protected under federal or Washington state law 3
to persons covered under the trust. 4
(5) Administrative expenses must include reasonable funding for 5
the employment security department to carry out its obligations 6
regarding enforcement of required health care expenditures and 7
collection of the employment contributions established in section 202 8
of this act, the contribution paid by sole proprietors established in 9
section 203 of this act, and the capital gains tax established in 10
section 302 of this act that are among the trust's funding sources.11
NEW SECTION. Sec. 117. ACTUARIAL ANALYSIS AND REPORTING. 12
Beginning December 15, 2026, the board shall contract annually for an 13
actuarial analysis of the trust's funding needs. The board shall 14
report annually on all the funding mechanisms to the appropriate 15
standing committees of the house of representatives, the senate, and 16
the governor, starting May 15, 2027. The funding mechanisms must 17
contain the following elements:18
(1) The employment investment to be paid by or on behalf of 19
employed residents and eligible nonresidents, established in section 20
111 of this act and under the exemption provided in section 114 of 21
this act; 22
(2) The long-term capital gains tax established in section 302 of 23
this act; 24
(3) The self-employment excise tax established in section 203 of 25
this act and under the exemption provided in section 114 of this act;26
(4) Any premiums necessary, as established in section 107 of this 27
act and pursuant to sections 111 and 112 of this act, to be paid by 28
enrolled adults, their spouse, or an employer prior to full 29
integration of federally qualified trusts; 30
(5) A cost-sharing schedule, established in section 110 of this 31
act and pursuant to section 112 of this act, paid by enrolled adults 32
with household incomes exceeding 299 percent of the federal poverty 33
level, their spouse, or an employer; and 34
(6) Available federal health program funding either pursuant to 35
waivers or other integration measures taken as described in sections 36
113 and 115 of this act, or by contracting for administration of 37
those benefits as described in section 112 of this act.38
p. 21 HB 1445
NEW SECTION. Sec. 118. ALLOCATION OF NEW REVENUES. Revenue 1
derived from the contributions established in sections 202, 203, and 2
302 of this act and any premiums established under section 107 of 3
this act shall be deposited to the reserve account created in section 4
120 of this act and the benefits account created in section 122 of 5
this act, and may not be used to pay for medical assistance currently 6
provided under chapter 74.09 RCW or other existing federal and state 7
health care programs. If existing federal and state sources of 8
payment for health services are reduced or terminated after the 9
effective date of this section, the legislature shall replace these 10
appropriations from the general fund.11
NEW SECTION. Sec. 119. START-UP APPROPRIATIONS. An 12
appropriation by separate act of the legislature may be necessary for 13
the fiscal year ending June 30, 2026, from the general fund to the 14
benefits account for start-up moneys for purposes of this chapter 15
during the period of July 1, 2026, through the second June 30th 16
following the effective date of section 115 of this act. Those 17
appropriations should be sufficient to cover the anticipated costs of 18
the first year of the Washington health trust and may include excess 19
reserves currently held by current health insurance companies doing 20
business within Washington state.21
NEW SECTION. Sec. 120. RESERVE ACCOUNT. (1) The reserve account 22
is created in the custody of the state treasurer. The reserve account 23
will accumulate moneys until its value equals 10 percent of the total 24
annual budgeted trust expenditures and then will be considered fully 25
funded, unless the legislature determines that a different level of 26
reserve is necessary and prudent. Whenever the reserve account is 27
fully funded, additional moneys shall be transferred to the benefits 28
account created in section 122 of this act.29
(2) Expenditures from the reserve account may be used only for 30
the purposes of health care services and maintenance of the trust. 31
Only the board or the board's designee may authorize expenditures 32
from the account. The account is subject to allotment procedures 33
under chapter 43.88 RCW, but an appropriation is not required for 34
expenditures. 35
NEW SECTION. Sec. 121. DISPLACED WORKER TRAINING ACCOUNT. (1) 36
The displaced worker training account is created in the custody of 37
p. 22 HB 1445
the state treasurer. Expenditures from the account may be used only 1
for retraining and job placement of workers displaced by the 2
transition to the trust. Only the board or the board's designee may 3
authorize expenditures from the account. The account is subject to 4
allotment procedures under chapter 43.88 RCW, but an appropriation is 5
not required for expenditures. 6
(2) Any funds remaining in the account on the second December 7
31st following the effective date of section 115 of this act must be 8
deposited into the benefits account created in section 122 of this 9
act. 10
(3) This section expires the third January 1st following the 11
effective date of section 115 of this act. 12
NEW SECTION. Sec. 122. BENEFITS ACCOUNT. The benefits account 13
is created in the custody of the state treasurer. Expenditures from 14
the account may be used only for health care services and maintenance 15
of the trust. Only the board or the board's designee may authorize 16
expenditures from the account. The account is subject to allotment 17
procedures under chapter 43.88 RCW, but an appropriation is not 18
required for expenditures.19
NEW SECTION. Sec. 123. CAPITAL IMPROVEMENTS ACCOUNT. (1) The 20
capital improvements account is created in the custody of the state 21
treasurer. Expenditures from the account may be used only for capital 22
improvements and new facilities. Only the board or the board's 23
designee may authorize expenditures from the account. The account is 24
subject to allotment procedures under chapter 43.88 RCW, but an 25
appropriation is not required for expenditures.26
(2) The health care authority shall conduct community needs 27
assessments at least once every five years, in consultation with 28
community providers and the department of health, to assess capital 29
needs and apply for federal, public, and private funding to support 30
those improvements, which shall be deposited into the capital 31
improvements account. 32
NEW SECTION. Sec. 124. ANNUAL BUDGET. (1) Beginning May 15, 33
2027, the board shall adopt, in consultation with the office of 34
financial management, an annual Washington health trust budget. If 35
operation expenses exceed revenues generated in two consecutive 36
p. 23 HB 1445
years, the board shall recommend adjustments in revenues to the 1
legislature. 2
(2) The recommended adjustments must also include recommended 3
additional funding sources including, but not limited to, revenues 4
collected under RCW 41.05.120, 41.05.130, 66.24.290, 82.24.020, 5
82.26.020, 82.08.150, 43.79.480, and 41.05.220. 6
(3) The recommendations shall specify the amounts that must be 7
deposited in the reserve account created in section 120 of this act, 8
the displaced worker training account created in section 121 of this 9
act, and the benefits account created in section 122 of this act.10
(4) Prior to making its recommendations, the board shall conduct 11
at least six public hearings in different geographic regions of the 12
state seeking public input or comment on the recommended funding 13
mechanism. 14
(5) The legislature shall enact legislation implementing the 15
recommendations of the board during the regular legislative session 16
following the recommendations. 17
NEW SECTION. Sec. 125. COST REPORTING. The board shall:18
(1) Report annual changes in total Washington health care costs, 19
along with the financial position and the status of the trust, to the 20
governor, the legislature, and the employment security department at 21
least once a year; 22
(2) Seek audits annually from the state auditor;23
(3) Contract with the state auditor for a performance audit every 24
two years; 25
(4) Adopt bylaws, rules, and other appropriate governance 26
documents to assure accountability, as well as the open, fair, and 27
effective operation of the trust, including criteria under which 28
reserve funds may be prudently invested subject to advice from the 29
state treasurer and the director of the department of financial 30
management; 31
(5) Submit any internal rules or policies it adopts to the 32
secretary of state. Internal rules or policies must be made available 33
by the secretary of state for public inspection; and34
(6) Collaborate with the health care authority to recommend 35
adjustments to the percent of an employee's wages an employer must 36
pay to or on behalf of an employee for required health care 37
expenditures established in section 202 of this act to the employment 38
security department, including the self-employment contribution and 39
p. 24 HB 1445
employee deduction. Recommendations must ensure the employment-based 1
contribution percentage rates: 2
(a) Do not exceed 10.5 percent of an employee's aggregate 3
adjusted quarterly payroll; 4
(b) Are not higher than is necessary to provide adequate funding 5
for the trust and the health options program as described in section 6
127 of this act; 7
(c) Are equal for the self-employment contribution and the 8
employee deduction; and 9
(d) Do not reduce any individual's access to health care services 10
or enrollment in the trust. 11
NEW SECTION. Sec. 126. CONFORMING EMPLOYER BENEFITS PLANS. (1) 12
Employers may maintain employee benefits plans under the federal 13
employee retirement income security act of 1974.14
(2) Irrevocable expenditures. 15
(a) At least 50 percent of each required health care expenditure 16
for calendar year 2026 must consist of irrevocable expenditures. 17
Revocable expenditures that exceed 40 percent of required health care 18
expenditures shall not be counted toward the employer spending 19
requirement. 20
(b) At least 80 percent of each required health care expenditure 21
for calendar year 2027 must consist of irrevocable expenditures. 22
Revocable expenditures that exceed 20 percent of required health care 23
expenditures shall not be counted toward the employer spending 24
requirement. 25
(c) On and after January 1, 2028, only irrevocable health care 26
expenditures shall be counted toward the employer spending 27
requirement. 28
(d) Health care expenditures paid to the employment security 29
department or the trust on behalf of an employee are not revocable.30
(3) Revocable expenditures. Subject to the limitations in 31
subsection (2) of this section, revocable health care expenditures 32
shall be counted toward the employer spending requirement, provided 33
that: 34
(a) The expenditure is reasonably calculated to benefit the 35
employee; 36
(b) No portion of the expenditure is revoked prior to the 37
earliest of: (i) Twenty-four months from the date of the expenditure; 38
(ii) ninety days after separation from employment; or (iii) for 39
p. 25 HB 1445
revocable expenditures made prior to January 1, 2028, the date that 1
the employee knowingly, voluntarily, and permanently waives in 2
writing the unused portion of such expenditure; 3
(c) The employee receives from the employer or its agent a 4
written summary within 15 calendar days of the date of the 5
expenditure that includes: (i) The name, address, email address, and 6
telephone number of any third party to whom the expenditure was made; 7
(ii) the date and amount of the expenditure; (iii) a summary of how 8
the benefit may be used, including types of health care services 9
available; (iv) restrictions on the use of this benefit, including 10
maximum dollar value of benefits or account balances; and (v) the 11
date on which any portion of this benefit will be revoked; and12
(d) An employee who separates from employment with any amount of 13
unused revocable expenditures receives, within three business days 14
following the separation: (i) A written notice with a summary of how 15
the benefit may be used, including types of health care services 16
available; (ii) restrictions on the use of this benefit, including 17
maximum dollar value of benefits or account balances; and (iii) the 18
date on which the benefit will be revoked. 19
(4) Effect of court order. If the attorney general certifies to 20
the governor and the legislature that a court of competent 21
jurisdiction has struck down any provision of subsection (3) of this 22
section, or permanently enjoined its enforcement, then only 23
irrevocable expenditures shall count toward the employer spending 24
requirement as of the first day of the next calendar quarter 25
following the attorney general's certification. 26
(5) All employers operating in the state may pay the employment 27
contribution for an employee directly to the trust for the purpose of 28
establishing the employee's eligibility to enroll in the trust.29
(6) Residents employed in the state and enrolled in minimum 30
essential coverage, as defined by the patient protection and 31
affordable care act, may: 32
(a) Participate in the medical reimbursement accounts as 33
described in section 127 of this act; or 34
(b) Elect to apply any unused required health care expenditures 35
an employer paid to the employment security department towards any 36
employment investment required for enrollment in the trust 37
established in section 103 of this act, subject to exclusions defined 38
in section 111 of this act, to enroll in the trust as a primary 39
health insurance. 40
p. 26 HB 1445
NEW SECTION. Sec. 127. HEALTH OPTIONS PROGRAM. (1) The health 1
care authority shall administer the health options program for 2
residents not enrolled in the trust, which comprises community health 3
access and medical reimbursement accounts. The health care authority 4
shall determine eligibility and benefits under the program component 5
to maximize participants' overall access to health care services.6
(2) Under community health access, eligible uninsured Washington 7
residents may obtain essential health benefits from any providers 8
participating in the trust as community health providers. Community 9
health access is not an insurance plan. 10
(3) Health options program access shall be open to eligible, 11
uninsured Washington residents except when they are eligible to 12
receive benefits under medicare or medicaid. Additional eligibility 13
criteria shall be established by the health care authority, but no 14
person may be excluded from community health access based on 15
employment or immigration status or a preexisting condition.16
(4) The health options program may be funded from a variety of 17
sources, including required health care expenditures paid by 18
employers and sole proprietors pursuant to section 202 of this act 19
and from the trust. 20
(5) Community health access shall use the rates established 21
through annual negotiations by community health providers under the 22
trust as described in section 109 of this act. 23
(6) Community health access shall provide payment for essential 24
health benefits as defined in section 102 of this act to providers 25
participating in the trust as community health providers as described 26
in section 109 of this act. 27
(7) The employment security department shall be authorized to 28
transfer payments made by employers to satisfy their health care 29
expenditure requirements as set forth in section 202 of this act to 30
the health care authority. The health care authority shall establish 31
and maintain the medical reimbursement accounts from which employees 32
may obtain reimbursement of health care expenditures in the amount of 33
and under the terms set by the board in annual negotiations with 34
community health providers as established in section 109 of this act.35
(8) The health care authority may coordinate with a nonprofit 36
third-party vendor to administer program operations, including 37
enrollment, tracking service utilization, billing, and communication 38
with the participants. 39
p. 27 HB 1445
(9) The health care authority shall develop a plan to more 1
directly integrate employer coverage for essential health benefits 2
and to ensure that employer health care expenditures made to the 3
employment security department pursuant to section 202 of this act 4
can be used to maximize enrollment in health insurance through the 5
trust or medicaid. This plan may include possible options for 6
incenting employers to provide quality, affordable health insurance 7
directly to employees. This plan shall be presented to the 8
legislature annually beginning no later than December 1, 2029, so 9
that it may be considered and approved for full implementation to 10
begin during a marketplace open enrollment period no more than 20 11
months following approval. Until a plan to integrate employer 12
essential health coverage directly into the trust is approved by the 13
legislature, the health care authority shall continue to administer 14
the health options program, which includes community health access 15
and medical reimbursement accounts, in a manner that is consistent 16
with section 101 of this act. 17
NEW SECTION. Sec. 128. CONFORMING FEDERALLY QUALIFIED TRUST 18
FUNDS. By January 1, 2029, the board shall submit to the legislature 19
a proposal to integrate those current and future federally qualified 20
trust funds that choose to participate in the trust.21
NEW SECTION. Sec. 129. CONFORMING LABOR AND INDUSTRIES. By 22
January 1, 2029, the board, in coordination with the department of 23
labor and industries, shall study and make a report to the governor 24
and appropriate committees of the legislature on the coordination of 25
essential health benefits for injured workers under the trust.26
Part II27
Employment-Based Contributions28
NEW SECTION. Sec. 201. DEFINITIONS. The definitions in this 29
section apply throughout this chapter unless the context clearly 30
requires otherwise.31
(1) "Adjusted net earnings from self-employment of sole 32
proprietors" means "net earnings from self-employment of sole 33
proprietors" as defined in section 1402 of the internal revenue code 34
less a number equal to 15,000 total net earnings from self-employment 35
p. 28 HB 1445
of sole proprietors and allocated to the state as provided in section 1
203 of this act. All numbers less than zero equal zero.2
(2) "Adjusted quarterly payroll" means aggregate gross payroll 3
paid to a Washington state resident less the healthy Washington 4
payroll exemption. 5
(3) "Commissioner" means the commissioner of the department or 6
the commissioner's designee. 7
(4) "Department" means the employment security department.8
(5) "Employee deduction" means the portion of the employer 9
contribution that can be deducted from an employee's paycheck.10
(6) "Employer" has the meaning provided in RCW 50A.05.010.11
(7) "Employer contribution" means the assessment required by 12
section 202 of this act. 13
(8) "Employer spending requirement" means the sum total of 14
required health care expenditures that an employer must make for all 15
of its employees. 16
(9) "Employment" has the meaning provided in RCW 50A.05.010.17
(10) "Health care expenditure" means an amount paid by an 18
employer to an employee or a trustee or a third party on behalf of 19
the employee for the purpose of providing or reimbursing the cost of 20
health care services for employees, their spouses, or both, domestic 21
partners, children, or other dependents. "Health care expenditure" 22
also means an amount paid by an employer to the Washington health 23
trust on behalf of the employee to establish their enrollment in the 24
Washington health trust in the manner and according to the terms set 25
by the health care authority. "Health care expenditure" does not 26
include any amount otherwise required to be paid by federal, state, 27
or local law. 28
(11) "Health care services" means medical care, services, or 29
goods that may qualify as tax deductible medical care expenses under 30
section 213 of the internal revenue code, or medical care, services, 31
or goods having substantially the same purpose or effect as such 32
deductible expenses. 33
(12) "Healthy Washington payroll exemption" means a number equal 34
to 3,750 paid to the employee allocated to the state as provided in 35
section 202 of this act. However, a number less than zero equals 36
zero. 37
(13) "Individual" means a natural person. 38
(14) "Internal revenue code" means the United States internal 39
revenue code of 1986, as amended, as of the effective date of this 40
p. 29 HB 1445
section, or such subsequent date as the department of revenue may 1
provide by rule consistent with the purpose of this chapter.2
(15) "Microbusiness" means any business entity, corporation, 3
partnership, or other legal entity, that: (a) Is owned and operated 4
independently from all other businesses; and (b) has a gross profit 5
of less than $1,000,000 annually as reported on its federal tax 6
return or on its return filed with the department of revenue.7
(16) "Minibusiness" means any business entity, corporation, 8
partnership, or other legal entity, that: (a) Is owned and operated 9
independently from all other businesses; and (b) has a gross profit 10
of less than $3,000,000, but at least $1,000,000 annually as reported 11
on its federal tax return or on its return filed with the department 12
of revenue. 13
(17) "Partnership" means an association of two or more persons to 14
carry on as co-owners a business for profit formed under RCW 15
25.05.055, predecessor law, or comparable law of another 16
jurisdiction. 17
(18) "Payroll" means any amount paid to Washington state 18
residents and defined as "wages" under section 3121 of the internal 19
revenue code, and does not include voluntary gratuities from service 20
industries where voluntary gratuities are a historical norm.21
(19) "Remuneration" has the meaning provided in RCW 50A.05.010.22
(20) "Required health care expenditure" means the health care 23
expenditure that an employer is required to make to, or on behalf of, 24
an employee. 25
(21) "Resident" means an individual who meets residency 26
requirements consistent with RCW 46.16A.140. "Resident" also includes 27
an individual and the individual's accompanying family members who 28
are residing in the state for the purpose of engaging in employment 29
for at least one month. The confinement of a person in a nursing 30
home, hospital, or other medical institution in the state may not by 31
itself be sufficient to qualify such person as a resident.32
(22) "Service is localized in this state" has the meaning 33
described in RCW 50.04.120. 34
(23) "Sole proprietor" means: 35
(a) Any self-employed person, including a sole proprietor or 36
independent contractor; or 37
(b) A qualified joint venturer as described in Title 26 U.S.C. 38
Sec. 761 of the internal revenue code. 39
p. 30 HB 1445
(24) "Taxable year" means the taxpayer's taxable year as 1
determined under the internal revenue code. 2
(25) "Taxpayer" means an individual subject to tax under this 3
chapter. 4
(26) "Wage" or "wages" means: 5
(a) For the purpose of the employer contributions, the 6
remuneration paid by an employer to an employee. The maximum wages 7
subject to an assessment are those wages as set by the commissioner 8
under section 202 of this act; 9
(b) For the purpose of payment of benefits, the remuneration paid 10
by one or more employers to an employee for employment during the 11
employee's qualifying period. At the request of an employee, wages 12
may be calculated on the basis of remuneration payable. The 13
department shall notify each employee that wages are calculated on 14
the basis of remuneration paid, but at the employee's request a 15
redetermination may be performed and based on remuneration payable;16
(c) Adjusted net earnings from self-employment of sole 17
proprietors. 18
NEW SECTION. Sec. 202. EMPLOYER REQUIRED HEALTH CARE 19
EXPENDITURE AND EMPLOYER CONTRIBUTION PROCEDURE. (1)(a) Beginning 20
January 1, 2029, employers shall make required health care 21
expenditures to or on behalf of each employee each quarter. The 22
department shall assess for each individual in employment with an 23
employer and for each sole proprietor an employment contribution 24
based on the amount of the individual's wages subject to section 203 25
of this act.26
(b) The standard assessment rate shall be equal to 10.5 percent 27
of an employee's quarterly payroll or wages and less the employer's 28
health care expenditures for that employee during the same reporting 29
period. 30
(c) A minibusiness operating within the state of Washington shall 31
pay an assessment rate of 6.5 percent of an employee's aggregate 32
adjusted quarterly payroll or wages, less the employer's health care 33
expenditures for that employee during the same reporting period.34
(d) A microbusiness operating within the state of Washington 35
shall pay an assessment rate of 4.5 percent of an employee's 36
aggregate adjusted quarterly payroll or wages, less the employer's 37
health care expenditures for that employee during the same reporting 38
period. 39
p. 31 HB 1445
(e) An employer may deduct up to two percent of the required 1
health care expenditure from an employee's wages. 2
(f) An employer may elect to pay all or any portion of the 3
employee deduction. 4
(2) The employer must collect from the employees the required 5
health care expenditure provided under this section through payroll 6
deductions and remit the amounts collected to the department or make 7
a health care expenditure to or on behalf of the employee.8
(3) Contributions from employers and sole proprietors shall be 9
collected in the manner and at such intervals as provided in this 10
title and directed by the department. 11
(4) Health care expenditures paid to or on behalf of an employee 12
exceeding the required health care expenditure for the employee must 13
not be counted toward the employer spending requirement except as 14
expressly permitted by the department. 15
(5) When an employer pays the entire required health care 16
expenditure for an employee to the department the employee is 17
eligible for enrollment in the Washington health trust and the 18
employment contribution required must be deposited in the benefits 19
account created in section 122 of this act. 20
(6) Employers with fewer than 50 employees and that face 21
financial hardship in paying the required health care expenditure 22
may, upon application to the department, be eligible for waivers or 23
reductions in the assessment. The department shall establish rules 24
and procedures governing all aspects of the business assistance 25
program, including application procedures, eligibility criteria, 26
wages, profits, age of firm, and duration of assistance.27
(7) Pending integration of any federally qualified trust funds, 28
such as medicare or medicaid, the payroll of employees covered under 29
these trust funds is exempt from the employer contribution, although 30
the employer may pay health care expenditures to the department on 31
behalf of the employee voluntarily. 32
(8) Unless repeal, amendment, waiver, or other integration 33
measure for applicable state and federal laws described in section 34
111 of this act, payroll of Native American residents who do not 35
elect to enroll in the Washington health trust is exempt from the 36
employer contribution. 37
(9) The department must deposit revenue collected under this 38
section into the medical reimbursement accounts created in section 39
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127 of this act or the Washington health trust benefits account 1
created in section 122 of this act. 2
(10) To the extent feasible and not inconsistent with the 3
provisions in this chapter, the department shall use the premium 4
assessment, collection, and reporting procedures in Title 50A RCW for 5
the employment contribution assessment, collection, and reporting.6
(11) Beginning January 2030 and on a biennial basis, the 7
department shall adjust the required health care expenditures and the 8
employer contribution assessment rate for the following year based on 9
recommendations from the health care authority and the board of the 10
Washington health trust. 11
NEW SECTION. Sec. 203. EMPLOYEE HEALTH EXPENDITURES AND 12
EMPLOYEE DEDUCTION — APPLICABILITY. (1) Beginning January 1, 2029, an 13
employee deduction is imposed on the receipt of wages by residents 14
employed in Washington state, not to include voluntary gratuities 15
from service industries where voluntary gratuities are considered a 16
historical norm. All employers in Washington state must collect the 17
employee deduction on aggregate gross payroll paid to Washington 18
state residents from employee wages and make required health care 19
expenditures, pay the employee deduction to the department in 20
quarterly installments, or pay the employee deduction on behalf of an 21
employee. Except as provided in sections 114 and 202 (11) of this act, 22
the employee deduction shall be two percent of the employee's 23
aggregate adjusted quarterly payroll.24
(2) The pay or wages from employees who are exempt from the 25
required health care expenditure established in section 202 of this 26
act are exempt from owing the employee deduction on those wages.27
(3) Beginning January 1, 2028, residents operating as sole 28
proprietors must pay a self-employment contribution in annual 29
installments to the department of two percent on adjusted net 30
earnings from self-employment. 31
(4) Partnerships are subject to the employment contribution 32
established in section 202 of this act and are responsible for 33
collecting the employee deduction on behalf of employees as provided 34
in this section. 35
(5) S corporations are not subject to the employment contribution 36
under this chapter. 37
p. 33 HB 1445
NEW SECTION. Sec. 204. EMPLOYER WITHHOLDING ESTIMATED EMPLOYEE 1
DEDUCTION. Every employer making a payment of wages or salaries 2
earned in this state by Washington residents, regardless of the place 3
where the payment is made, and who is required by the internal 4
revenue code to withhold taxes, must deduct and withhold an employee 5
deduction as prescribed by the department by rule. The rules 6
prescribed must reasonably reflect the quarterly tax liability of the 7
employee under this chapter. Every employer making such a deduction 8
and withholding must furnish to the employee a record of the amount 9
of tax deducted and withheld from the employee on forms provided by 10
the department.11
NEW SECTION. Sec. 205. EMPLOYER IS LIABLE FOR TAX WITHHELD. Any 12
employer required to deduct and withhold the employee deduction 13
imposed by this chapter is liable under section 204 of this act to 14
the department for the payment of the amount deducted and withheld, 15
and is not liable to any other person for the amount of tax deducted 16
and withheld under this chapter or for the act of withholding.17
NEW SECTION. Sec. 206. CREDITS FOR WITHHELD EMPLOYEE HEALTH 18
CONTRIBUTIONS. The amount deducted and withheld as tax under sections 19
204 through 221 of this act during any taxable year is allowed as a 20
credit against the employer contribution imposed for the taxable year 21
by this chapter. If the liability of any individual for taxes, 22
interest, penalties, or other amounts due the state of Washington is 23
less than the total amount of the credit which the individual is 24
entitled to claim under this section, the individual is entitled to a 25
refund from the department in the amount of the excess of the credit 26
over the tax otherwise due. If any individual entitled to claim a 27
credit under this section is not otherwise required by this chapter 28
to file a return with the department, a refund may be obtained in the 29
amount of the credit by filing a return with the department, with 30
applicable sections completed, to claim the refund. No credit or 31
refund is allowed under this section unless the credit or refund is 32
claimed on a return filed for the taxable year for which the amount 33
was deducted and withheld.34
NEW SECTION. Sec. 207. EMPLOYER RESPONSIBILITIES. (1) An 35
employer shall:36
p. 34 HB 1445
(a) Maintain accurate records of health care expenditures, 1
required health care expenditures, and proof of such expenditures 2
made each quarter and each year, and allow the department reasonable 3
access to such records, provided, however, that employers are not 4
required to maintain such records in any particular form; and5
(b) Provide information to the department, or the department 6
designee, on an annual basis containing additional information as the 7
department requires, including information on the employer's 8
compliance with this chapter. The department may not require an 9
employer to provide information in violation of state or federal 10
privacy laws. In the event the information required by the department 11
is comingled with information protected by privacy laws, the employer 12
shall redact the private information. If an employer uses a revocable 13
expenditure to satisfy its obligation to make required health care 14
expenditures for any of its employees, the employer shall also report 15
to the department any conditions or restrictions on the employee's 16
use of the expenditure, and the condition or conditions that permit 17
any portion of the expenditure to be revoked by or returned to the 18
employer. 19
(2) Where an employer does not maintain or retain adequate 20
records documenting the health care expenditures made, or does not 21
allow the department reasonable access to such records, it shall be 22
presumed that the employer did not make the required health care 23
expenditures for the quarter for which records are lacking, absent 24
clear and convincing evidence otherwise. The department of revenue 25
and the health care authority have the authority to provide any and 26
all nonfinancial information to the department necessary to fulfill 27
the department responsibilities as the enforcing agency under this 28
chapter. With regard to all such information provided by the 29
department of revenue and the health care authority, the department 30
shall be subject to the confidentiality provisions in RCW 82.32.330.31
NEW SECTION. Sec. 208. PENALTIES FOR FAILURE TO PAY OR COLLECT 32
WITHHOLDINGS. (1) The employee deduction required by this chapter to 33
be collected by the employer is deemed to be held in trust by the 34
employer until the required health care expenditure is made or the 35
assessment is paid to the department.36
(2) In case any employer, or a responsible person within the 37
meaning of internal revenue code section 6672, collected the tax and 38
fails to pay it to the department, the employer or responsible person 39
p. 35 HB 1445
is personally liable to the state for the amount collected. The 1
interest and penalty provisions of chapter 82.32 RCW apply to this 2
section. An employer or other responsible person who appropriates or 3
converts the employee health assessment is guilty of a gross 4
misdemeanor as provided in chapter 9A.20 RCW. 5
(3) In case any employer or responsible person within the meaning 6
of internal revenue code section 6672 fails to collect the employee 7
health assessment herein imposed, the employer is still liable to the 8
state for the amount owed. 9
NEW SECTION. Sec. 209. OUT-OF-STATE EMPLOYERS OF WASHINGTON 10
RESIDENTS. By January 1, 2029, the department shall develop policy, 11
procedures, and forms allowing out-of-state employers employing one 12
or more residents of Washington state to voluntarily pay the employer 13
contribution established in section 202 of this act.14
NEW SECTION. Sec. 210. EMPLOYER REQUIREMENTS. To the extent not 15
inconsistent with the provisions of this chapter, RCW 50A.20.030 16
applies to the employer requirements imposed under this chapter.17
NEW SECTION. Sec. 211. UNLAWFUL ACTS— EMPLOYERS. To the extent 18
not inconsistent with the provisions of this chapter, RCW 50A.40.010 19
applies to the unlawful acts of employers imposed under this chapter. 20
NEW SECTION. Sec. 212. EMPLOYER PENALTIES. To the extent not 21
inconsistent with the provisions of this chapter, RCW 50A.40.010 22
applies to the employer penalties imposed under this chapter.23
NEW SECTION. Sec. 213. OUT-OF-STATE EMPLOYEES — CONTRIBUTION 24
WAIVER. An employer may file an application with the department for a 25
conditional waiver for the payment of the employer contribution under 26
section 202 of this act for out-of-state employees for any employees 27
granted a waiver for the family and medical leave premiums defined in 28
RCW 50A.10.040.29
NEW SECTION. Sec. 214. TERMINATION OR DISPOSAL OF BUSINESS — 30
CONTRIBUTION PAYMENT— SUCCESSOR LIABILITY. Whenever any employer quits 31
business, or sells out, exchanges, or otherwise disposes of the 32
employer's business or stock of goods, any employer contributions 33
p. 36 HB 1445
payable under this chapter shall become immediately due and payable. 1
The employer shall, within 10 days, make a return and pay the 2
employer contributions due; and any person who becomes a successor to 3
such business shall become liable for the full amount of the employer 4
contributions and withhold from the purchase price a sum sufficient 5
to pay any employer contributions due from the employer until such 6
time as the employer produces a receipt from the department showing 7
payment in full of any employer contributions due or a certificate 8
that no employer contribution is due and, if such employer 9
contribution is not paid by the employer within 10 days from the date 10
of such sale, exchange, or disposal, the successor shall become 11
liable for the payment of the full amount of employer contributions, 12
and the payment thereof by such successor shall, to the extent 13
thereof, be deemed a payment upon the purchase price, and if such 14
payment is greater in amount than the purchase price the amount of 15
the difference shall become a debt due such successor from the 16
employer. A successor may not be liable for any employer 17
contributions due from the person from whom the successor acquired a 18
business or stock of goods if that person gives written notice to the 19
department of such acquisition and no employer contribution is issued 20
by the department within 180 days of receipt of such notice against 21
the former operator of the business and a copy thereof mailed to such 22
successor. 23
NEW SECTION. Sec. 215. DELINQUENCY— ORDER AND NOTICE OF 24
ASSESSMENT. At any time after the commissioner shall find that any 25
employer contributions, interest, or penalties have become 26
delinquent, the commissioner may issue an order and notice of 27
assessment and enforce collection using a process consistent with 28
those provided for family and medical leave in RCW 50A.45.015 through 29
50A.45.070 except that:30
(1) Interest collected under this section shall be paid into the 31
Washington health trust enforcement account; and 32
(2) Property acquired by the department may be sold by the 33
commissioner or their representative at public or private sale, and 34
the amount realized shall be placed in the Washington health trust 35
enforcement account. 36
NEW SECTION. Sec. 216. UNCOLLECTIBLE ACCOUNTS. The commissioner 37
may charge off as uncollectible and no longer an asset of the 38
p. 37 HB 1445
Washington health trust enforcement account, any delinquent 1
assessments, interest, penalties, or credits if the commissioner is 2
satisfied that there are no cost-effective means of collecting the 3
assessments, interest, penalties, or credits. 4
NEW SECTION. Sec. 217. INSPECTION AND AUDIT. The department may 5
inspect and audit employer files and records relating to the 6
Washington health trust program.7
NEW SECTION. Sec. 218. ENFORCEMENT ACCOUNT. The Washington 8
health trust enforcement account is created in the custody of the 9
state treasurer. Any penalties and interest collected under this 10
chapter must be deposited into the account and shall be used only for 11
the purposes of administering and enforcing this chapter. Only the 12
commissioner may authorize expenditures from the account. The account 13
is subject to allotment procedures under chapter 43.88 RCW, but an 14
appropriation is not required for expenditures.15
NEW SECTION. Sec. 219. AGREEMENT TO WAIVE. (1) Any agreement to 16
waive, release, or commute an individual's right to benefits or any 17
other rights under this chapter is void.18
(2) Any assignment, pledge, or encumbrance of any right to 19
benefits that are or may become due or payable under this chapter is 20
void. Such rights to benefits are exempt from levy, execution, 21
attachment, or any other remedy whatsoever provided for the 22
collection of debts. Any waiver of any exemption provided for in this 23
section is void. 24
NEW SECTION. Sec. 220. ALLOCATION OF REVENUES TO BENEFITS 25
ACCOUNT. All revenue from taxes collected by the department under 26
this chapter, including penalties and interest on such taxes, must be 27
deposited in the benefits account created in section 122 of this act.28
NEW SECTION. Sec. 221. ADOPTION OF RULES. The commissioner 29
shall have the authority to adopt, amend, or rescind rules 30
interpreting and implementing the provisions of this chapter.31
NEW SECTION. Sec. 222. CONFORMING RCW. To the extent not 32
inconsistent with the provisions of this chapter, chapter 82.32 RCW 33
p. 38 HB 1445
applies to the administration of taxes imposed under section 203 of 1
this act. 2
Part III3
Capital Gains Investment in Health4
NEW SECTION. Sec. 301. DEFINITIONS. The definitions in this 5
section apply throughout this chapter unless the context clearly 6
requires otherwise.7
(1) "Accessory dwelling unit" means a separate habitable living 8
area that is subordinate to the principal single-family dwelling 9
unit, which is either internal to, attached to, or located on the 10
same property tax parcel as, the principal single-family dwelling 11
unit. 12
(2) "Adjusted capital gain" has the meaning provided in RCW 13
82.87.020. 14
(3) "Capital asset" has the same meaning as provided by Title 26 15
U.S.C. Sec. 1221 of the internal revenue code and also includes any 16
other property if the sale or exchange of the property results in a 17
gain that is treated as a long-term capital gain under Title 26 18
U.S.C. Sec. 1231 or any other provision of the internal revenue code.19
(4) "Department" means the department of revenue.20
(5) "Federal net long-term capital gain" has the meaning provided 21
in RCW 82.87.020. 22
(6) "Individual" means a natural person. 23
(7) "Internal revenue code" means the United States internal 24
revenue code of 1986, as amended, as of the effective date of this 25
section, or such subsequent date as the department may provide by 26
rule consistent with the purpose of this chapter. 27
(8) "Long-term capital asset" means a capital asset that is held 28
for more than one year. 29
(9) "Resident" has the meaning provided in RCW 82.87.020.30
(10) "Taxable year" means the taxpayer's taxable year as 31
determined under the internal revenue code. 32
(11) "Taxpayer" means an individual subject to tax under this 33
chapter. 34
(12) "Washington investment in health capital gains" means an 35
individual's annual adjusted capital gain under this chapter, for 36
each return filed under this chapter. 37
p. 39 HB 1445
NEW SECTION. Sec. 302. LONG-TERM CAPITAL GAINS TAX. (1) 1
Beginning January 1, 2026, the excise tax on capital gains income 2
authorized in chapter 82.87 RCW shall be increased with all new 3
revenues funding the Washington health trust. The tax on net earnings 4
between $200,000 and $250,000 will equal five percent multiplied by 5
the individual's Washington capital gains. For net earnings in excess 6
of $300,000, an additional two percent is levied in addition to 7
existing capital gains taxes.8
(2) If an individual's Washington capital gains are less than 9
zero for a taxable year, no tax is due under this section. No such 10
losses may be carried back or carried forward to another taxable 11
year. 12
(3) The tax imposed in this section applies to:13
(a) The sale or exchange of long-term capital assets owned by the 14
taxpayer, whether the taxpayer was the legal or a beneficial owner of 15
such assets at the time of the sale or exchange; or16
(b) Washington capital gains otherwise realized by the taxpayer.17
(4) For purposes of this chapter, an individual is a beneficial 18
owner of long-term capital assets held by an entity that is a pass-19
through or disregarded entity for federal tax purposes, such as a 20
partnership, limited liability company, S corporation, or trust, to 21
the extent of the individual's ownership interest in the entity as 22
reported for federal income tax purposes. 23
NEW SECTION. Sec. 303. EXEMPTS CERTAIN GAINS AND LOSSES. This 24
chapter does not apply to the sale or exchange of:25
(1) Any residential dwelling, along with the land upon which the 26
dwelling is located. For the purposes of this subsection, 27
"residential dwelling" means property consisting solely of:28
(a) A single-family residence, a residential condominium unit, or 29
a residential cooperative unit, including any accessory dwelling unit 30
associated with such residence or residential unit;31
(b) A multifamily residential building consisting of one or more 32
common walls and fewer than four units; or 33
(c) A floating home as defined in RCW 82.45.032;34
(2) Assets held under a retirement savings account under Title 26 35
U.S.C. Sec. 401 (k) of the internal revenue code, a tax-sheltered 36
annuity or a custodial account described in Title 26 U.S.C. Sec. 37
403(b) of the internal revenue code, a deferred compensation plan 38
under Title 26 U.S.C. Sec. 457 (b) of the internal revenue code, an 39
p. 40 HB 1445
individual retirement account or an individual retirement annuity 1
described in Title 26 U.S.C. Sec. 408 of the internal revenue code, a 2
roth individual retirement account described in Title 26 U.S.C. Sec. 3
408A of the internal revenue code, an employee defined contribution 4
program, an employee defined benefit plan, or a similar retirement 5
savings vehicle; 6
(3) Assets pursuant to or under imminent threat of condemnation 7
proceedings by the United States, the state or any of its political 8
subdivisions, or a municipal corporation; 9
(4) Cattle, horses, or breeding livestock held for more than 12 10
months if, for the taxable year of the sale or exchange, more than 50 11
percent of the taxpayer's gross income for the taxable year, 12
including from the sale or exchange of capital assets, is from 13
farming or ranching; 14
(5) Agricultural land by an individual who has regular, 15
continuous, and substantial involvement in the operation of the 16
agricultural land that meets the criteria for material participation 17
in an activity under Title 26 U.S.C. Sec. 469 (h) of the internal 18
revenue code for the 10 years prior to the date of the sale or 19
exchange of the agricultural land; 20
(6) Property used in a trade or business if the property 21
qualifies for an income tax deduction under Title 26 U.S.C. Sec. 167 22
or 179 of the internal revenue code; 23
(7) Timber, timberland, or the receipt of Washington capital 24
gains as dividends and distributions from real estate investment 25
trusts derived from gains from the sale or exchange of timber. 26
"Timber" means forest trees, standing or down, on privately or 27
publicly owned land, and includes Christmas trees and short-rotation 28
hardwoods. The sale or exchange of timber includes the cutting or 29
disposal of timber qualifying for capital gains treatment under Title 30
26 U.S.C. Sec. 631(a) or (b) of the internal revenue code;31
(8) Long-term capital assets owned by the taxpayer used towards 32
the purchase of a primary residence located in Washington state; and33
(9) Long-term capital assets owned by the taxpayer used to 34
purchase a residence in a retirement living community or pay for 35
long-term care, assisted living or home health care not covered by 36
any long-term care benefits available to the taxpayer for themselves, 37
a family member, or their domestic partner. 38
p. 41 HB 1445
NEW SECTION. Sec. 304. COMPUTATION OF TAX — DEDUCTION OF 1
PROHIBITED AMOUNTS. In computing tax, there may be deducted from the 2
measure of tax amounts that the state is prohibited from taxing under 3
the state or federal Constitutions.4
NEW SECTION. Sec. 305. QUALIFIED FAMILY-OWNED SMALL BUSINESS 5
DEDUCTION. (1) In computing tax under this chapter for a taxable 6
year, a taxpayer may deduct adjusted capital gains, to the extent 7
they are included in Washington capital gains, derived in the taxable 8
year from the sale of substantially all of the fair market value of 9
the assets of, or the transfer of substantially all of the taxpayer's 10
interest in, a qualified family-owned small business.11
(2) For purposes of this section, the following definitions 12
apply: 13
(a) "Assets" means real property and personal property, including 14
tangible personal property and intangible property.15
(b) "Family" has the same meaning as "member of the family" in 16
RCW 83.100.046. 17
(c)(i) "Materially participated" means an individual was involved 18
in the operation of a business on a basis that is regular, 19
continuous, and substantial. 20
(ii) The term "materially participated" must be interpreted 21
consistently with the applicable treasury regulations for section 469 22
of the internal revenue code, to the extent that such interpretation 23
does not conflict with any provision of this section.24
(d) "Qualified family-owned small business" means a business:25
(i) In which the taxpayer held a qualifying interest for at least 26
eight years immediately preceding the sale or transfer described in 27
subsection (1) of this section; 28
(ii) In which the taxpayer or their family member materially 29
participated in operating the business for at least five of the eight 30
years immediately preceding the sale or transfer described in 31
subsection (1) of this section, unless such sale or transfer was to a 32
qualified heir; 33
(iii)(A) That had no more than 50 full-time employees at any time 34
during the 12-month period immediately preceding the sale or transfer 35
described in subsection (1) of this section. 36
(B) For purposes of this subsection (2)(d)(iii), "full-time 37
employee" means an employee who is, or any combination of employees 38
who are, paid by the business for at least 1,820 hours of employment, 39
p. 42 HB 1445
including paid leave, for the 12-month period described in 1
(d)(iii)(A) of this subsection (2); and 2
(iv) That had worldwide gross revenue of $7,000,000 or less in 3
the 12-month period immediately preceding the sale or transfer 4
described in subsection (1) of this section. 5
(e) "Qualified heir" means a member of the taxpayer's family.6
(f) "Qualifying interest" means: 7
(i) An interest as a proprietor in a business carried on as a 8
sole proprietorship; or 9
(ii) An interest in a business if at least: 10
(A) Fifty percent of the business is owned, directly or 11
indirectly, by the taxpayer and members of the taxpayer's family;12
(B) Thirty percent of the business is owned, directly or 13
indirectly, by the taxpayer and members of the taxpayer's family, and 14
at least: 15
(I) Seventy percent of the business is owned, directly or 16
indirectly, by members of two families; or 17
(II) Ninety percent of the business is owned, directly or 18
indirectly, by members of three families. 19
(g) "Substantially all" means at least 90 percent.20
NEW SECTION. Sec. 306. ADJUSTED CAPITAL GAINS. For purposes of 21
the tax imposed under this chapter, adjusted capital gains are 22
allocated as follows:23
(1) Adjusted capital gains from the sale or exchange of real 24
property are allocated to this state if the real property is located 25
in this state or a majority of the fair market value of the real 26
property is located in this state; 27
(2) Adjusted capital gains from the sale or exchange of tangible 28
personal property are allocated to this state if the property was 29
located in this state at the time of the sale or exchange. Adjusted 30
capital gains from the sale or exchange of tangible personal property 31
are also allocated to this state even though the property was not 32
located in this state at the time of the sale or exchange if:33
(a) The property was located in the state at any time during the 34
taxable year in which the sale or exchange occurred or the 35
immediately preceding taxable year; 36
(b) The taxpayer was a resident at the time the sale or exchange 37
occurred; and 38
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(c) The taxpayer is not subject to the payment of an income or 1
excise tax legally imposed on the adjusted capital gain by another 2
taxing jurisdiction; and 3
(3) Adjusted capital gains derived from intangible personal 4
property are allocated to this state if the taxpayer was domiciled in 5
this state at the time the sale or exchange occurred.6
NEW SECTION. Sec. 307. DUAL RESIDENCE. (1) If an individual is 7
regarded as a resident both of this state and another jurisdiction 8
for state tax purposes, the department must reduce the tax on that 9
portion of the taxpayer's income which is subjected to tax in both 10
jurisdictions solely by virtue of dual residence, if the other taxing 11
jurisdiction allows a similar reduction.12
(2) As used in this section, "taxing jurisdiction" means a state 13
of the United States other than the state of Washington, the District 14
of Columbia, the Commonwealth of Puerto Rico, any territory or 15
possession of the United States, or any foreign country or political 16
subdivision of a foreign country. 17
NEW SECTION. Sec. 308. TREATMENT OF PARTNERSHIPS AND S 18
CORPORATION INCOME. (1) Partnerships are not subject to the long-term 19
capital gains tax under this chapter. Partners are subject to the 20
long-term capital gains tax under this chapter in their separate or 21
individual capacities.22
(2) S corporations are not subject to the long-term capital gains 23
tax under this chapter. Shareholders of S corporations are subject to 24
the long-term capital gains tax under this chapter in their separate 25
or individual capacities. 26
NEW SECTION. Sec. 309. PERSONS REQUIRED TO FILE A STATE RETURN. 27
(1) Only individual and joint taxpayers with federal net long-term 28
capital gains or net earnings from self-employment of sole 29
proprietors in excess of $200,000 on their federal tax return are 30
required to file a capital gains tax return with the department. Each 31
person required to file a return under this chapter must, without 32
assessment, notice, or demand, pay any tax due thereon to the 33
department on or before the date fixed for the filing of the return.34
(2) Except as otherwise provided in this chapter or RCW 35
82.32.080, taxpayers owing tax under this chapter must file, on forms 36
prescribed by the department, a return with the department on or 37
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before the date the taxpayer's federal income tax return for the 1
taxable year is required to be filed along with all schedules and 2
supporting documentation. 3
(3) If an adjustment to a taxpayer's federal return is made by 4
the taxpayer or the internal revenue service, the taxpayer must, 5
within 90 days of the final determination of the adjustment by the 6
internal revenue service or within 30 days of the filing of a federal 7
return adjusted by the taxpayer, file with the department on forms 8
prescribed by the department a corrected return reflecting the 9
adjustments as finally determined; however, such an amendment of the 10
state return may take place only when the original filing was made in 11
error. The taxpayer must pay any additional tax due resulting from 12
the finally determined internal revenue service adjustment or a 13
taxpayer adjustment without notice and assessment. Notwithstanding 14
any provision of this chapter or any other title to the contrary, the 15
period of limitation for the collection of the additional tax, 16
interest, and penalty due as a result of such an adjustment by the 17
taxpayer or a finally determined internal revenue service adjustment 18
must begin at the later of 30 days following the final determination 19
of the adjustment or the date of the filing of the corrected return.20
(4) If a taxpayer required to file a return under this section 21
has obtained an extension of time for filing the federal tax return 22
for the taxable year, the taxpayer is entitled to the same extension 23
of time for filing the return required under this section if the 24
taxpayer provides the department, before the due date provided in 25
subsection (1) of this section, the extension confirmation number or 26
other evidence satisfactory to the department confirming the federal 27
extension. An extension under this subsection for the filing of a 28
return under this chapter is not an extension of time to pay the tax 29
due under this chapter. 30
(5) If any return due on long-term capital gains under subsection 31
(1) of this section, along with a copy of the federal tax return, is 32
not filed with the department by the due date or any extension 33
granted by the department, the department must assess a penalty in 34
the amount of five percent of the tax due for the taxable year 35
covered by the return for each month or portion of a month that the 36
return remains unfiled. The total penalty assessed under this 37
subsection may not exceed 25 percent of the tax due for the taxable 38
year covered by the delinquent return. 39
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(a) The penalty under this subsection is in addition to any 1
penalties assessed for the late payment of any tax due on the return.2
(b) The department must waive or cancel the penalty imposed under 3
this subsection if: 4
(i) The department is persuaded that the taxpayer's failure to 5
file the return by the due date was due to circumstances beyond the 6
taxpayer's control; or 7
(ii) The taxpayer has not been delinquent in filing any return 8
due under this section during the preceding five calendar years.9
NEW SECTION. Sec. 310. PENALTIES. (1) Any taxpayer who 10
knowingly attempts to evade payment of the tax imposed under this 11
chapter is guilty of a class C felony as provided in chapter 9A.20 12
RCW.13
(2) Any taxpayer who knowingly fails to pay tax, make returns, 14
keep records, or supply information, as required under this title, is 15
guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.16
NEW SECTION. Sec. 311. INSTRUCTIONS FOR JOINT FILING. (1) If 17
the federal income tax liabilities of both spouses are determined on 18
a joint federal return for the taxable year, they must file a joint 19
return under this chapter.20
(2) Except as otherwise provided in this subsection, if the 21
federal income tax liability of either spouse is determined on a 22
separate federal return for the taxable year, they must file separate 23
returns under this chapter. State registered domestic partners may 24
file a joint return under this chapter even if they filed separate 25
federal returns for the taxable year. 26
(3) In any case in which a joint return is filed under this 27
section, the liability of each spouse or state registered domestic 28
partner is joint and several, unless: 29
(a) The spouse is relieved of liability for federal tax purposes 30
as provided under Title 26 U.S.C. Sec. 6015 of the internal revenue 31
code; or 32
(b) The department determines that the domestic partner qualifies 33
for relief as provided by rule of the department. Such rule, to the 34
extent possible without being inconsistent with this chapter, must 35
follow Title 26 U.S.C. Sec. 6015. 36
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(4) The department must take actions and adopt rules, forms, and 1
procedures to implement this chapter consistently with RCW 26.60.015, 2
notwithstanding any term or provision of this chapter.3
NEW SECTION. Sec. 312. DUE DATES FOR RETURNS, PENALTIES. The 4
due date of a return required to be filed with the department is the 5
due date of the applicable federal income tax return for federal 6
income tax purposes. The department may grant extensions of time by 7
which returns required to be filed by this chapter may be submitted. 8
The department may grant extensions of time to pay tax with regard to 9
taxes imposed by this chapter. Interest at the rate as specified in 10
RCW 82.32.050 accrues during any extension period and the interest 11
and penalty provisions of chapter 82.32 RCW apply to late payments 12
and deficiencies. RCW 82.32.105 applies to this section.13
NEW SECTION. Sec. 313. RECORDS AND RETURNS. (1) Every taxpayer 14
with federal net long-term capital gains or net earnings from self-15
employment of sole proprietors in excess of $200,000 annually must 16
keep records, render statements, make returns, file reports, and 17
perform other acts as the department requires by rule. Each return 18
must be made under penalty of perjury and on forms prescribed by the 19
department. The department may require other statements and reports 20
be made under penalty of perjury and on forms prescribed by the 21
department. The department may require any taxpayer and any person 22
required to deduct and withhold the tax imposed under this chapter to 23
furnish to the department a correct copy of any return or document 24
which the taxpayer has filed with the internal revenue service or 25
received from the internal revenue service.26
(2) All books and records and other papers and documents required 27
to be kept under this chapter are subject to inspection by the 28
department at all times during business hours of the day.29
NEW SECTION. Sec. 314. ALLOCATION OF REVENUES TO BENEFITS 30
ACCOUNT. All revenue from taxes collected by the department under 31
this chapter, including penalties and interest on such taxes, must be 32
deposited in the benefits account created in section 122 of this act.33
NEW SECTION. Sec. 315. TAXES UNDER THIS CHAPTER IN ADDITION TO 34
OTHER TAXES. The tax imposed under this chapter is in addition to any 35
other taxes imposed by the state or any of its political 36
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subdivisions, or a municipal corporation, with respect to the same 1
sale or exchange, including the taxes imposed in or under the 2
authority of chapter 82.04, 82.08, 82.12, 82.14, 82.45, or 82.46 RCW.3
NEW SECTION. Sec. 316. REFUNDS FOR OVERPAYMENT. The department 4
must refund all taxes improperly paid or collected by the department.5
NEW SECTION. Sec. 317. A new section is added to chapter 82.32 6
RCW to read as follows: 7
ALLOWS STATES TO COORDINATE. (1) The department may enter into 8
reciprocal tax collection agreements with the taxing officials of any 9
other state imposing a specific tax. Agreements authorized under this 10
section must require each state to offset delinquent specified taxes 11
owed by a taxpayer to one party to the agreement, including any 12
associated penalties, interest, or other additions, against refunds 13
of overpaid specified taxes owed to the taxpayer by the other party 14
to the agreement. Such agreements may also include provisions 15
governing the sharing of information relevant to the administration 16
of specified taxes. However, the department may not share return or 17
tax information with other states except as allowed under RCW 18
82.32.330. Likewise, the department may not share federal tax 19
information with other states without the express written consent of 20
the internal revenue service. 21
(2) The definitions in this subsection apply throughout this 22
section unless the context clearly requires otherwise.23
(a) "Specific taxes" means generally applicable state and local 24
sales tax and use taxes, broad-based state gross receipts taxes, 25
state income taxes, and stand-alone state taxes on capital gains or 26
interest and dividends. "Specified taxes" include, but are not 27
limited to, the taxes imposed in or under the authority of chapters 28
82.04, 82.08, 82.12, 82.14, 82.16, and 82.--- RCW (the new chapter 29
created in section 401 (3) of this act), and similar taxes imposed by 30
another state. For purposes of this subsection (2)(a), "gross 31
receipts tax," "income tax," "sales tax," and "use tax" have the 32
meanings provided in RCW 82.56.010. 33
(b) "State" has the meaning provided in RCW 82.56.010.34
NEW SECTION. Sec. 318. CONFORMING RCW. To the extent not 35
inconsistent with the provisions of this chapter, the following 36
statutes apply to the administration of taxes imposed under this 37
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chapter: RCW 82.32.050, 82.32.055, 82.32.060, 82.32.070, 82.32.080, 1
82.32.085, 82.32.090, 82.32.100, 82.32.105, 82.32.110, 82.32.117, 2
82.32.120, 82.32.130, 82.32.135, 82.32.150, 82.32.160, 82.32.170, 3
82.32.180, 82.32.190, 82.32.200, 82.32.210, 82.32.212, 82.32.220, 4
82.32.230, 82.32.235, 82.32.237, 82.32.240, 82.32.245, 82.32.265, 5
82.32.300, 82.32.310, 82.32.320, 82.32.330, 82.32.340, 82.32.350, 6
82.32.360, 82.32.410, 82.32.805, 82.32.808, and section 317 of this 7
act. 8
NEW SECTION. Sec. 319. A new section is added to chapter 82.04 9
RCW to read as follows: 10
A deduction is allowed against a person's gross income of the 11
business to the extent necessary to avoid taxing the same amounts 12
under this chapter and section 302 of this act. 13
NEW SECTION. Sec. 320. RULES. The department may adopt rules 14
for the administration and enforcement of this act.15
NEW SECTION. Sec. 321. APPEALS. The board of tax appeals has 16
jurisdiction over appeals relating to tax deficiencies and refunds, 17
including penalties and interest, under this chapter. The taxpayer 18
may elect a formal or informal hearing pursuant to RCW 82.03.140. 19
Before appealing to the board of tax appeals, the taxpayer may first 20
elect to address disputes through the department's administrative 21
review process.22
NEW SECTION. Sec. 322. Notwithstanding any common law rule of 23
strict construction of statutes imposing taxes, this chapter, being 24
necessary for the welfare of the state and its inhabitants, must be 25
liberally construed in support of application of the tax.26
Part IV27
Miscellaneous28
NEW SECTION. Sec. 401. CODIFICATION. (1) Sections 101 through 29
113 and 115 through 129 of this act constitute a new chapter in Title 30
43 RCW.31
(2) Sections 114 and 201 through 222 of this act constitute a new 32
title to be codified as Title 50C RCW. 33
p. 49 HB 1445
(3) Sections 301 through 316, 318, and 320 through 322 of this 1
act constitute a new chapter in Title 82 RCW. 2
NEW SECTION. Sec. 402. EFFECTIVE DATES. (1) Sections 101 3
through 107 of this act take effect February 1, 2026.4
(2) Sections 108 through 114, 116 through 118, and 120 through 5
125 of this act take effect March 1, 2026. 6
(3) Sections 126 through 129 of this act take effect May 15, 7
2027. 8
NEW SECTION. Sec. 403. CONTINGENT EFFECTIVE AND EXPIRATION 9
DATES. (1) Section 115 of this act takes effect at the earlier of 10
April 1, 2029, or when 60 percent of residents are enrolled in health 11
insurance coverage managed by:12
(a) The health care authority; 13
(b) An entity within the health care authority; or14
(c) The board created in section 104 of this act.15
(2) The health care authority must provide notice of the 16
effective date of section 115 of this act and the expiration dates of 17
sections 114 and 121 of this act to affected parties, the chief clerk 18
of the house of representatives, the secretary of the senate, the 19
office of the code reviser, and others as deemed appropriate by the 20
authority. 21
NEW SECTION. Sec. 404. SEVERABILITY. If any provision of this 22
act or its application to any person or circumstance is held invalid, 23
the remainder of the act or the application of the provision to other 24
persons or circumstances is not affected.25
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