Colorado is gearing up for some meaningful changes starting January 1, 2026. Updates like the new Neonatal Care Leave and IRS guidance can affect the steps brokers and employers will need to follow to stay compliant in 2026.
Neonatal Care Leave
One of the biggest changes for 2026 is the addition of a new benefit, Neonatal Care Leave. This type of leave is meant for parents whose newborns require inpatient care in a neonatal intensive care unit (NICU) and provides up to an additional 12 weeks of leave.
With Neonatal Leave Care, eligible parents can take an additional 12 weeks for a child needing NICU care. This is in addition to the existing 12 weeks of PFML benefits for Bonding Leave, as well as the additional 4 weeks available for birthing parents who experience complications during pregnancy or childbirth, bringing the total potential leave to up to 28 weeks for eligible parents.
Get key details about the upcoming Neonatal Care benefit here.
State Average Weekly Wage & Premium Rate Adjustments
For Paid Family and Medical Leave (PFML) in Colorado, the maximum weekly benefit is capped at 90% of the State Average Weekly Wage (SAWW). In June 2025, a new SAWW of $1,534.94 was announced along with a new maximum benefit amount of $,1381.45. These new amounts went into effect on July 1, 2025.
Senate Bill 25-144, which added Neonatal Care Leave, also adjusted the contribution rate and funding schedule. For calendar year 2025, the premium rate remained 0.9% of wages per employee. Beginning January 1, 2026 the rate will drop slightly to 0.88% of wages per employee.
Moving forward, the FAMLI Division Director of Colorado’s Department of Labor and Employment (CDLE) will set the next year's rate by September 1, and the rate will not exceed 1.2% of wages.
IRS Guidance for Paid Family and Medical Leave Programs
Colorado employers should also be aware that the Internal Revenue Service (IRS) issued guidance for state Paid Family and Medical Leave programs, and a grace period for transition relief ends December 31, 2025. For additional information or to ensure business compliance, employers are encouraged to consult a tax professional or contact the FAMLI Division.
Stay in the Know on CO PFML
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This material is for informational purposes only and is not intended to provide legal counsel. Please consult with an appropriate professional for legal and compliance advice. Any program information is based on our knowledge and understanding of CO’s applicable laws and regulations as of the publication date and may change as regulations evolve or CO issues updated guidance. Further, this material is for illustrative purposes only, providing a general overview of the services described. It is not a contract nor intended as an offer of coverage.
Policies are subject to Underwriting approval. Policies are reviewed annually and may be cancelled for nonpayment. All coverage extends to limits reflected in the policy. Please refer to the policy for coverage details pursuant to its governing law, including a complete listing of covered services, provisions, conditions, exclusions, limitations, and terms under which the policy may be continued or cancelled. In the event of conflicting information with the policy and its governing Law, the policy and governing Law will take precedence over what is shown in this material. Claim payment is not guaranteed; benefit amount depends on wages.
The Colorado Paid Family and Medical Leave Insurance Act § 8-13.3-501 et seq., C.R.S and its implementing regulations including 7 CCR 1107-1, et seq. govern this Private Plan and its interpretation and administration. Available in CO only.
Underwritten by: ShelterPoint Life Insurance Company (principal office in Garden City, NY) in: CO (form# SPL PFMLP 0325 CO).