Beginning next year, an employee earning $50,000 annually will see their premium increase to $328, up from $264 this year and $291 in 2023, according to state officials. These hikes are a response to the program’s financial difficulties, which have arisen from growth exceeding initial expectations.
In 2024 alone, over 175,000 workers have accessed benefits, totaling $1.35 billion—marking the highest amount distributed in a single year since the program’s inception in 2020. To date, the program has disbursed more than $5 billion to over 510,000 employees and is projected to grow by another 35% over the next two years.
A financial analysis conducted in 2022 indicated that the program would face a deficit by year-end unless state funding or premium rates were adjusted. The tax rate was initially set at 0.6% but was raised to 0.8% in 2023. This year, however, it was reduced to 0.74%, partly due to a $200 million allocation from the Legislature directly into the program. This decision, while providing immediate relief, hindered the program’s path to financial stability.
The reduction in the premium rate resulted in lower revenue compared to the benefits being paid out. The department forecasts that this disparity will necessitate a rate increase in 2025.
Additionally, the agency is seeking approval from the state to hire 98 new employees to manage the growing number of applications. Without this staffing boost, the department warns it may struggle to adequately handle applications and customer service inquiries.
As the state program gains popularity, Washington workers can expect a larger portion of their paychecks to be allocated toward Paid Family and Medical Leave next year. Starting in January, the program’s premium rate will rise to 0.92% of an employee’s gross wages, an increase from the current 0.74% rate. State law mandates an annual recalculation of this rate.
The increase stems from the program’s continued expansion, a rise in the number of eligible employees post-pandemic, and the conclusion of a collective bargaining agreement that previously limited access for some workers. The program enables individuals to take paid leave for serious health conditions, caregiving responsibilities, or the arrival of a new child. It is financed through a tax shared by both workers and employers, with employers contributing 28.48% and employees contributing 71.52% of the total premium, maintaining a similar distribution to this year.