New legislative changes in Colorado are set to expand the state’s Paid Family and Medical Leave Insurance (FAMLI) program, offering significant added support for families facing medical challenges. Under Senate Bill 25-144 (SB 144), which took effect on January 1, 2026, the state will introduce extended leave benefits for parents of children in neonatal intensive care and adjust the program’s funding premiums.
Background: Enhancing the FAMLI Program
Since its implementation, the Colorado FAMLI program has provided wage-replacement benefits to employees for qualifying reasons, such as caring for a new child or managing a serious health condition. Recognizing the unique burden placed on families with infants requiring intensive medical care, SB 144 was enacted to ensure parents do not have to choose between their economic security and being present for their child’s critical care.
Key Changes Introduced by SB 144
The amendments introduced by SB 144 bring two primary changes that will impact employer administration and employee benefits starting in 2026:
- Extended Leave for NICU Care. For claims filed on or after January 1, 2026, employees will be eligible for up to an additional 12 weeks of paid FAMLI benefits if their child is receiving inpatient care in a neonatal intensive care unit (NICU).
- This additional leave is available for the duration of the child’s NICU stay.
- This new entitlement is in addition to the standard 12 weeks of bonding leave, allowing eligible parents to potentially receive a total of 24 weeks of paid leave.
- If the birthing parent also experiences pregnancy or childbirth complications, they may be eligible for an additional 4 weeks, bringing the total potential leave to 28 weeks.
- Reduced Premium Rates. The legislation also modifies the funding model for the FAMLI program. As of January 1, 2026, the total premium rate will decrease from 0.9 percent to 0.88 percent of employee wages.
- This rate is shared between employers (0.44%) and employees (0.44%), though employers may choose to cover a larger portion.
- Small employers (fewer than 10 employees) remain exempt from the employer portion of the premium.
- Future rates will be set annually by the FAMLI Division director, capped at 1.2% of wages.
Next Steps for Employers
Employers should take the following steps to ensure compliance and smooth leave administration process:
- Update Payroll Systems: Ensure your payroll processing systems are adjusted to reflect the new premium rate of 0.88 percent.
- Revise Leave Policies: Review and update employee handbooks and leave policies to clearly outline the new eligibility criteria for NICU leave and distinguish it from standard bonding leave.
- Communicate with Employees: Inform your workforce about these upcoming changes, specifically the reduced premium deduction and the expanded safety net for new parents.
- Train HR Teams: Educate managers and HR personnel on new leave parameters to ensure accurate tracking and consistent application of the new benefits.
