Department of Financial Services shows how premiums will be calculated
On June 1, 2017 the New York State Department of Financial Services released the methodology for calculating the premium rates and maximum weekly employee contribution for the first year of the state’s new Paid Family Leave program.
Last year Governor Andrew Cuomo signed the Paid Family Leave program into law. The law is designed to provide workers in New York paid time off to bond with a new child, care for a family member, or, handle personal matters when a family member is called to active duty in the armed services. In 2018, the first year workers will be eligible to use Paid Family Leave, they can receive 50% of their weekly wages up to 50% of the statewide average weekly wage for up to 8 weeks of leave. Once the program is fully phased in that will increase to 67% of their weekly wage up to 67% of the statewide average weekly wage for 12 weeks of leave.
The Paid Family Leave will be paid for by employees through a payroll deduction and will function similarly to New York State Disability Insurance. In fact, insurance carriers that offer NYS Statutory DBL will be required to add Paid Family Leave as a rider to the Disability policies. This is the premium rate announced by the DFS last week.
How Costs Are Calculated
Employees are responsible for 100% of the premium based on a percentage of the employee's weekly wage capped at New York State's current average weekly wage. This "weekly wage" is reviewed and re-determined July 1st each year by New York State.
The premium and maximum employee contribution for coverage beginning January 1, 2018 will be 0.126% of an employee’s weekly wage up to and not to exceed the statewide average weekly wage. The statewide average weekly wage as of July 1, 2017 will be $1,305.92. Employees whose income is at or above the statewide average weekly wage are eligible only for the maximum benefit, and therefore their premiums will be a percentage of the statewide average weekly wage.
Based on this information the maximum an employee will pay per week for Paid Family Leave is $1.65.
The premium deducted from the employee will be on a sliding scale. If an employee earns $400 a week, the premium would be $.50 a week.
What does this mean for employers?
According to the law employers may begin to make these premium rate deductions beginning on July 1, 2017. However, there are still many questions that need to be answered, for instance:
HR One is seeking more information on this question and questions like it. Stay tuned for updates.
Employers are also strongly encouraged to speak with their disability insurance broker for additional information.
If you have questions about the Paid Family Leave program call the HR Helpline at 1(800) 457-8829.