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Washington workers could see a bigger chunk of their paychecks going toward Paid Family and Medical Leave next year as the increasingly popular state program remains under financial pressure.
Starting in January, the program’s premium rate will be 0.92%, up from the current 0.74% rate. State law requires the program to recalculate the rate every year.
The uptick is due to the continued growth of the program, more employees becoming eligible for benefits following the pandemic, and the end of a collective bargaining agreement that kept some workers boxed out, according to the Employment Security Department.
The program allows people to take paid time off from work if they have a serious health condition, if they’re caring for family members, or if they have a new child.
It’s funded by a tax that workers and employers both pay. Next year, employers will pay 28.48% of the total premium, and employees will pay 71.52%, a similar breakdown to this year.
Next year, an employee making $50,000 a year will pay an annual premium of $328, according to the department. That’s up from $264 this year and $291 in 2023.
These increases come as the program faces financial challenges due to its growth, which has been faster than expected.
So far in 2024, more than 175,000 workers have received benefits, totaling $1.35 billion – more than any year since the program launched in 2020. In total, the program paid out more than $5 billion to more than 510,000 employees since it began, and it anticipates another 35% growth over the next two years.
In 2022, a financial analysis showed that the program would run a deficit by the end of that year without more state funding or a premium increase. At the time, the tax rate was 0.6%. The state upped the rate to 0.8% in 2023. But it lowered it again this year to 0.74% – in part because of $200 million the Legislature shifted directly into the program.
Doing so, however, set back the program’s progress toward financial stability.
The decreased rate caused revenue from premiums to be lower than the benefits the program was paying out, according to the department. The department expected that the difference between revenue and expenditures would lead to a higher rate in 2025.
Meanwhile, the agency is asking for authority from the state to hire 98 new employees to deal with the increase in applications. Without staffing increases, the department says the program will not be adequately staffed to respond to applications and customer service calls.