Colorado’s new paid family and medical leave program (known as FAMLI) allows employers to satisfy their obligations by adopting a private paid family and medical leave plan with equivalent rights and benefits to the state plan (for more information on FAMLI, view our webinar here). Since the law was passed, Colorado employers have been anxiously awaiting rules governing the process for adopting private plans before premiums start being collected next year.

On July 29, 2022, the state’s FAMLI Division issued guidance outlining a temporary procedure for employers to opt out of the state program in 2023. While the formal rules still have not been announced, the new guidance will provide employers additional time to evaluate private plan options before the state plan becomes effective on January 1, 2024.

Under this framework, all covered employers must register with the Division’s MyFAMLI+ portal (expected to be available later this fall) and start paying premiums in January 2023. However, employers who adopt an approved private plan on or effective before January 1, 2024, will receive a refund of any premiums paid to the state in 2023.

Employers will have until October 31, 2023 to apply for a private plan exemption from the FAMLI Division. Private plans can be either fully insured by an approved carrier or self-funded by the employer. Employers with approved private plans will be required to reimburse the FAMLI Division each year for the costs of administering the FAMLI program, and employers with self-funded plans must post a bond with the state. Once an employer’s private plan is approved, the FAMLI Division will reimburse the employer for any premiums paid in 2023, less the private plan administration fee. Those employers will no longer be required to submit premiums or wage reports to the state, but they must continue to maintain internal records related to the plan.

The FAMLI Division expects to issue formal rules related to the private plan process later this summer, which should provide additional detail on the registration and application process, administration fees and bonding requirements, and recordkeeping provisions. In the meantime, this guidance will be a welcome relief for employers interested in opting out of the state program.

IMA will be closely monitoring any developments in this area and will continue to provides updates as soon as possible.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.