The Employment Security Department (ESD) has announced that the premium rate for the paid family and medical leave (PFML) program will be 0.8% in 2023. (The announcement was made at today’s meeting of the PFML advisory committee.) The current rate is 0.6%, which is the maximum base rate allowed by statute. The 0.8% rate includes a 0.2% solvency surcharge. Employees will be statutorily responsible for 72.76% of the premium and employers will be responsible for 27.24%.

With the rate increase, ESD estimates that the account balance at the end of calendar year 2023 will be $6–8 million. Thus, the 0.8% rate is practically the bare minimum to keep the account positive at the end of the year. (The actuarial report from Milliman, which I wrote about here, had recommended a 0.79% rate. They projected that that would give the account a 2023 ending balance of $236.4 million. Crucially, however, Milliman did not account for the fact that although premiums will be assessed at the higher rate for the full calendar year, ESD will only collect premiums at the higher rate for three quarters of the year.)

ESD noted that with the 0.8% rate, they expect to continue to see account deficits in the next biennium. However, the legislative task force on paid family and medical leave insurance premiums will be making recommendations on changes to the premium rate structure, with the expectation that the Legislature will make changes in the upcoming session. The 0.8% rate “minimizes swings in rate while legislature determines long-term solution(s) for solvency.”

Meanwhile, ESD reported that the account has been in deficit since Oct. 5. (The current balance is about -$20 million, and it is estimated to get down to -$30 million before going positive again by the end of the month. Then the account will go negative again in December.)

Our policy brief on the PFML program’s financial problems this year is here.