On November 1, 2022, the Family and Medical Leave Insurance Division (the Division) of the Colorado Department of Labor and Employment adopted final rules that employers must follow to offer private plans under the Colorado’s Paid Family and Medical Leave Insurance (FAMLI) Act. Employers who already offer generous family leave benefits to employees have considered this option, at least in part to avoid the administrative burden of registering with the state. Employers who want to offer private plans instead of paying premiums to the state-administered insurance plan, which become due as of January 1, 2023, are awaiting the release of final rules as they prepare to comply. to the law.
FAMLI is creating a state-administered insurance program that will pay employees for eligible types of leave beginning January 1, 2024, much like unemployment insurance. The program will be funded by premiums paid by employers and their employees through payroll deductions, beginning one year earlier on January 1, 2023.
Employers and their employees are exempt from paying premiums if the employer offers a private paid family and medical leave plan approved by the Division. In a frustrating development for employers who intend to take advantage of the private plan option, all employers, including those applying for an approved private plan, must begin to withhold premiums and remit them to the Division in 2023. Once the employer’s private plan is approved, the employer can then request a refund of premiums paid in 2023 and stop collecting and remitting premiums.
The final rules, briefly summarized below, provide employers with a blueprint on how to obtain approval for such plans, whether the plan is self-insured by the employer or obtained through an approved insurer. by the state.
Private plan requirements
An employer’s private plan must provide the same rights, protections and benefits as the government-administered FAMLI program, including:
- Authorize leave with pay for all purposes specified by FAMLI (i.e. caring for the employee’s child, caring for an employee’s serious medical condition or employee’s family member, take Qualifying Requirement Leave, or take Safety Leave);
- Provide leave for the same number of weeks as FAMLI (i.e. 12 weeks, with an additional 4 weeks for complications of pregnancy or childbirth);
- Provide a salary replacement rate and maximum weekly benefits at least equal to the amounts required by FAMLI (currently capped at $1,100 per week);
- Allow intermittent holidays or a reduced schedule;
- Not to impose additional conditions or restrictions on services not authorized by FAMLI; and
- Provide a plan at a cost to employees not exceeding what is charged to employees under the FAMLI.
An employer must submit an application to the Division and obtain its approval before the establishment of the private plan. Applications can be submitted at any time and must include:
- The federal employer identification number (EIN) of the employer;
- The name of the employer;
- The employer’s business address;
- The employer’s mailing address;
- A designated contact person, with that person’s name and contact information;
- A copy of the employer’s self-insured private plan or, if the plan is provided by a state-licensed insurer, a copy of this insurance policy form;
- Certifications, completed by the employer, that the private plan meets FAMLI requirements and that forms used by employees and/or health care providers will not cost more than forms used under the public plan ;
- A copy of the posted notice required by 7 CCR 1107-5 § 5.9.4;
- Other information required on the application form (which the Division will make available on the My Employer FAMLI+ portal once finalized); and
- An administration fee of $500.00 for private plan applications received through 2024.
Additional requirements for self-insured plans
If the private plan is self-insured by the employer, the following must also be included in the application:
- A surety bond in an amount equal to one year of total premiums as well as payroll documents supporting the calculation of the surety bond; and
- Attestation that the employer has complied with the separate account requirements (see below).
In another requirement that will frustrate employers who already offer generous leave benefits, employers who are permitted to self-insure a private plan must establish and maintain a separate account: (1) into which all employee contributions are deposited and retained, and (2) from which all benefits are paid, and administrative costs may be paid.
According to separate directives from the Division, it expects to open the private plan application process between the first and third quarters of 2023. The Division will review applications as they are received. Private plans cannot become effective later than 60 days from the date of application to allow the Division time to review the application. Approval for a private plan will last for eight years, subject to renewal.
If an employer pays premiums in 2023 and later obtains approval for a private plan with an effective date no later than January 1, 2024, the employer may request a refund of premiums. The Division will reimburse the employer, within 90 days, for the premiums paid in 2023 less the private plan administration fee of $500.
The above summary is not exhaustive of the many requirements that private plans must meet to maintain Division approval. Ongoing obligations of an approved private plan include annual maintenance fees and certifications to the Division; requirements regarding record keeping, reporting, employee notices and confidentiality; and the rules governing the amendment and termination of the plan. Additionally, employers choosing a private plan may still be subject to scrutiny by the Division, for example, if an employee files a claim with the Division that a leave request was wrongly denied.
What this means for you
Employers and their employees are exempt from paying premiums if the employer offers a private paid family and medical leave plan approved by the Division; however, all employers, including those applying for an approved private plan, must begin deducting premiums and remitting them to the Division in 2023. Once the employer’s private plan is approved, the employer can then apply for the reimbursement of premiums paid in 2023 and stop collecting and remission of premiums.
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