More on FAMLI – Who Pays the Employee (and How Much) and Any Company-Sponsored Health Insurance Benefits?
Colorado’s Family and Medical Leave Insurance Program (FAMLI) is in full swing. Both employers and employees started contributing to the program in 2023, and employees can now apply for and take FAMLI Leave, if eligible.
There’s a lot for Colorado employers to know about FAMLI and how it works. In last month’s blog, we touched on some basics about FAMLI including what are qualified uses of FAMLI Leave, and how the claims process works.
This month, we are highlighting some other general questions and answers for Colorado employers that relate to who pays the employee’s wage and health insurance benefits when an employee is out on FAMLI Leave.
Who pays the employee’s wages when they are out on FAMLI Leave, how much do they get paid, and are FAMLI benefits subject to state and federal taxes?
- Since this is a social insurance program, the State of Colorado pays your employee (the claimant) directly through a debit card or direct deposit.
- FAMLI wage replacement benefits are paid at a rate of 90% of the employee’s average weekly wage, with lower wage earners receiving a higher percentage. The employee benefit is capped at $1,100 per week.
- Employers may allow employees receiving FAMLI benefits to use their accrued PTO to “top off” or cover the remaining balance of their typical weekly wage to “make whole” their take-home pay while on leave.
- There are no withholdings deducted from the employee’s FAMLI benefit amount, and these benefits are not subject to state income tax. Current IRS guidance suggests that state programs like FAMLI are taxed similarly to unemployment compensation, which is subject to federal income tax. Employees/claimants who receive FAMLI benefits will be issued an IRS form 1099-G by the State.
Who pays the employee’s health insurance benefits during their FAMLI Leave?
- Employer’s Share: If an employer normally pays for a portion of an employee’s health insurance benefits, they are required to continue to do so while the employee is on FAMLI Leave.
- Employee’s Share: Employers may choose to require the employee to continue to pay their share of their health insurance benefit costs while they are on leave. Since many employers collect the employee’s share of benefits through payroll deduction, if the employer is not paying the employee during their leave, other arrangements will need to be made with the employee to collect their share of the health insurance costs.
Stay tuned to future blogs for more information on FAMLI
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