On August 31, 2021, the Department of Financial Services (DFS) announced the applicable premium rate and maximum employee contribution for Paid Family Leave (PFL) coverage beginning January 1, 2022.
The state’s PFL program was first implemented on January 1, 2018. The program is intended to provide eligible employees with a portion of their wages while taking time off to bond with a child, care for a family member with a serious health condition, or handle personal matters arising from an immediate family member in the Armed Forces being called to active duty.
The PFL premium rate, like the benefit amount, is set as a percentage of an employee’s covered wage, so the premium paid by an employee depends on how much an employee earns. Accordingly, those earning less will pay a lower premium, and those earning more will pay a higher premium as they are eligible for higher benefits, up to the maximum PFL benefit of 67% of the statewide average weekly wage, which is $1,594.57 for 2022.
The premium rate for PFL benefits for coverage beginning January 1, 2022, shall remain at the level of the premium rate applicable to calendar year 2021, and be set at 0.506%, plus 0.005% for the risk adjustment for COVID-19 claims, for a total of 0.511% of an employee’s wages each pay period up to and not to exceed an annual maximum employee contribution of $423.71.
The PFL benefits are community rated to ensure all employees are similarly treated and not subject to cost variances based upon age, gender, location or other factors. According to DFS, the community rate for 2022 was based upon a review of claims, demographic, financial and other PFL data for 2018, 2019, 2020 and the first six months of 2021, as well as data from other states that have enacted similar programs.
Employers should be aware of the announcement and work with their carriers and payroll providers to ensure the premium rates are properly implemented and communicated.
Decision on Premium Rate for Paid Family Leave Benefits and Maximum Employee Contribution for Coverage Beginning January 1, 2022 »
PPI Benefit Solutions does not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.
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