What You Need to Know About Colorado FAMLI
Disclaimer: Please know that MLJ is not a tax advisor or a payroll specialist. Information provided is only based on information that is available from the state and insurers. Please consult with your other trusted advisors for payroll and tax advice.
If you run a business, you have heard about the new Colorado Employee Leave Act: Family and Medical Leave Insurance Program (FAMLI). The first phase of this new Colorado Statute takes effect 1/1/2023. This phase will be the need to remit premiums. MLJ held a webinar on this topic, and have posted the link to the recording that also included the Retirement Plan Requirement:
(FAMLI starts at 2:00 minutes and Retirement Plan at 20:00 minutes)
Employers must provide several items to their employees by 1/1/2023 and the FAMLI website has a great toolkit for employers.
Under FAMLI Employers responsibilities vary based on the type of entity and number of employees. For 9 or fewer employees, employees only must pay .045% of their salary in premium (an employer can pay this amount if desired). For 10 or more employees, Employers must pay .045% of salary and employees .045% of their salary for a combined total of .90% of salary (once again an employer can decide to pay all the premium). For more information see: https://famli.colorado.gov/employers.
Payroll providers are set up to do the withholding for the premiums beginning 1/1/2023. Most will make the quarterly payments for the premiums. Please check with your payroll provider to find out the process with them. You will want to provide your FAMLI Account Number.
It appears that premiums must be paid into the system for these employees as well. Insurers are indicating participation required as well.
There is the option to opt into private insurance in lieu of contributing to the state fund. To do this an employer will need to collect a quote from an insurer who offers disability insurance. Most insurers require at least 5 employees and up to two other lines of coverage to get a quote for a private insurance.
Notes about private insurance:
- For 2023 employers must pay into the state fund. During 2023 a process for filing for an exception will be made for private insurance. The exception must be filed for by 10/31/2023.
- Quotes are now available for 1/1/2024 and will be provided based on underwriting for each employer groups. Costs that we are seeing are less than the state fund in most cases. Premiums will not be locked in until closer to 1/1/2024.
- Benefits Brokers, such as MLJ Insurance, are happy to collect quotes for employers.
- There are some items to get worked out in the process for an exemption but for now here is what is known:
- A refund will be made from the state to the employers who receive an exemption after 1/1/2024, minus a $500 Administrative Fee.
- The insurer will pay benefits following the FAMLI guidelines and often in a quicker manner.
- If an employer is considering private insurance, we recommend not withholding any employee premium for 2023. We encourage the employer to pay the full 0.9% to avoid having to return funds to employees, active or terminated.
There are many resources available on https://famli.colorado.gov/ for employers and employees, which include past webinars, FAQs, information for employers and employees, and other very useful information. Quickbooks has also provided their webinar with Division FAMLI. We recommend you check it out!
At MLJ we are happy to do the leg work for you in finding the best coverage for your business. Each business is unique and requires someone who knows the ins and outs of disability insurance and how it can be more affordable and coordinate with the FAMLI benefits to ensure that your company offers the most efficient and reliable benefits to your employees.
We would love to be an advocate for your business. Give us a call today!