Understanding Famli Tax in Colorado

The FAMLI Tax in Colorado is paving the way for a new generation of success. It’s crucial to have a job that enables individuals to prioritize their well-being and their loved ones. A job that allows individuals to strike a healthy work-life balance ensures that they can devote ample attention to their personal needs and actively participate in the lives of their family members. 

Known as The Paid Family and Medical Leave Insurance Program, FAMLI Tax will allow most Colorado workers to receive all of these benefits. 

Famli Tax

What is the FAMLI Program? 

The FAMLI program will provide most Colorado workers with up to 12 weeks of paid time off to take care of themselves or their families during important life events. 

These life events may include:

  • Accidents
  • Serious illnesses 
  • A growing family
  • Arrangements for military deployments 

Who is Eligible? 

After earning at least $2,500 in wages within the last four calendar quarters, most Colorado workers will be eligible to reap the benefits of the FAMLI Program. 

How is it Funded? 

As a social insurance enterprise program, the funding for the FAMLI Program comes from employers and employees.

 However, small businesses with less than 10 employees are not required to contribute any funds to the program. Employers who already provide a privately funded paid leave program, that offers similar benefits, are able to apply to opt out of funding the FAMLI Program. 

As an added perk, employers are able to choose to cover employee contributions to the FAMLI Program. Depending on how much they earn, the amount that an employee contributes to the FAMLI Program will vary. 

What Does it Mean for Employees?

Life often throws unexpected circumstances at us that create challenges, some more difficult than others. The FAMLI Program will allow employees to take time off for these important circumstances such as:

  • Caring for a new child during the first year after the birth, adoption, or foster care placement of that child.
  • Caring for a family member with a serious health condition.
  • Caring for your own serious health condition.
  • Making arrangements for a family member’s military deployment.
  • Obtaining safe housing, care, and/or legal assistance in response to domestic violence, stalking, sexual assault, or sexual abuse.

The FAMLI Division will ensure that employees receive compensation at a rate of up to 90% of their wages, which is determined on a sliding scale aligned with Colorado’s average weekly wage. As of July 2022, the state’s average weekly wage stands at $1,350.55. Employees with lower incomes will be eligible for a greater proportion of wage replacement, while the maximum weekly benefit is set at $1,100.

Check out the Premium and Benefits Calculator to determine what your FAMLI benefit will be. 

Those who are self-employed or independent contractors are also eligible to apply for the FAMLI program and it is entirely optional for them. If you choose to opt-in, you must agree to pay premiums and report your income for a minimum of three years. Self-employed individuals have the flexibility to opt-in at any time and can apply for leave once the benefits become available in 2024. 

Therefore, registration in My FAMLI+ Employer is not required until then. If you register early, you are not obligated to pay premiums until 2024 when the benefits are accessible. While you may voluntarily submit your wage data in 2023, it is not mandatory.

For self-employed individuals who choose not to participate in FAMLI, there is no need to take any specific action to opt out of the program. Registration is only necessary if you voluntarily decide to opt-in and commit to paying premiums for three years once self-elect coverage is available in 2024.

What Does it Mean for Employers?

The FAMLI program empowers employers to be prepared and supportive when their employees need them the most. Life events can unpredictably impact the workforce, from car accidents to serious illnesses like cancer, or the joyful arrival of a new child.

Both employers and employees share the responsibility of funding the program, with the cost typically divided equally, each contributing 0.45% of the employee’s wage. Alternatively, employers have the option to cover the entire 0.9% premium as an additional benefit for their employees.

For businesses with nine or fewer employees, the sole requirement is to deduct and remit the 0.45% premium on behalf of their employees each quarter. These small businesses can also choose to pay the 0.45% premium on behalf of their employees entirely.

All businesses with at least one eligible employee must register with the FAMLI Division before the first premium payment is due at the end of the first quarter of 2023. However, self-employed individuals or sole proprietors without employees are not obligated to register. Regardless of your business structure, if you have at least one qualifying employee, the following are necessary: 

  • Registration with the Division
  • Submission of wage data
  • Payment of premiums on behalf of that employee 

Visit our Individuals and Families page for further details on options available to self-employed individuals. If you’re uncertain about whether your small business has qualifying employees, our Small Business Guide to FAMLI can provide valuable guidance.

When Do FAMLI Tax Deductions Begin? 

Deductions from employee wages begin January 1, 2023. The employee’s portion of FAMLI premiums amounts to 0.45% of their wages and remains constant until 2024. 

From 2025 onwards, the premium rate will be determined by the FAMLI Division Director who will use a formula based on the annual value of the fund.

When Can I Receive the Benefits? 

Most Colorado employees will be able to receive FAMLI benefits starting January 1, 2024. 

Individuals who experience significant health issues resulting from complications during pregnancy or childbirth are eligible to receive an additional four weeks of paid family and medical leave annually, bringing their total entitlement to 16 weeks. Leave is permitted to be taken continuously, intermittently, or in the form of a reduced schedule. 

How Do I File a Claim?

Instructions on how to apply for benefits will be provided on famli.colorado.gov during the last quarter of 2023. To apply for FAMLI benefits, employees or their designated representatives must submit an application along with the required documentation directly to the FAMLI Division. 

Employers do not have the authority to mandate employees to apply for FAMLI benefits. 

Applications can be submitted in advance of the leave or, in certain cases, even after the leave has commenced. Once approved, the FAMLI Division will initiate payment within two weeks of the properly filed claim and continue providing payments every two weeks throughout the approved leave period. 

Employees have the right to appeal claim determinations to the FAMLI Division. It is important to note that individuals attempting to defraud the FAMLI program may be disqualified from receiving benefits.

Famli Tax

Still Have Questions About the FAMLI Tax? 

Thanks to the FAMLI Tax Program, most Colorado workers will be able to take the necessary time they need to work through important events in their life. The program aims to provide employees with a healthy work-life balance, allowing them to prioritize their well-being and family.

Momentum.tax is here to provide answers to any questions about this program. For further inquiries about FAMLI Tax, contact us today!