Explainer: Paid Leave Benefits and Funding in the United States

As of January 2024, 13 states plus the District of Columbia (DC) have or will soon have statewide paid family and medical leave programs in place.

Ten—California, Colorado, Connecticut, DC, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington—currently make paid leave benefits available to workers.

Four additional states enacted paid family and medical leave programs that will begin paying benefits in 2026: Maryland and Delaware (passed in 2022) and Maine and Minnesota (passed in 2023). [1], [2]

Without a federal paid family and medical leave program—like the U.S. House of Representatives considered and passed in 2021 as part of the Build Back Better Act, but the U.S. Senate failed to take up—states are laboratories for innovation.

This explainer is a companion to our explainer on Federal FMLA and State Paid Leave Program Usage and Coverage. It seeks to answer policymakers’ questions about paid family and medical leave program design, including the benefits the programs offer and the methods states use to fund their comprehensive programs. It summarizes and compares the wage replacement people receive, the duration of time for which benefits are available, and the financing of the programs in each state’s enacted program. It shows the benefits that state paid leave programs deliver for a small cost.

This explainer also touches on a voluntary model in New Hampshire and Vermont as well as the authorization of the sale of private insurance in Alabama, Arkansas, Florida, Tennessee, Texas, and Virginia. These are not comprehensive programs and do not guarantee access to private sector workers.

Paid leave prevents workers and their families from falling down a financial rabbit hole when breadwinners need time away from their jobs to care for a loved one or address their own serious health issue. In 2018, Brandeis University researchers estimated that a typical worker will forgo more than $9,500 in lost wages to take 12 weeks of family or medical leave without pay. While on leave, workers still need to afford basic expenses to keep their families afloat, and paid leave provides the security to meet these basic financial obligations.

The country’s first two paid family leave programs, in California and New Jersey, began by replacing a fixed percentage of a worker’s typical wages when the worker needed to take paid family or medical leave (55 percent and 67 percent, respectively); these two states have subsequently raised their wage replacement rates.

• In 2017, California implemented a temporary increase in its rate to 60 percent for most workers and 70 percent for the lowest-wage workers—but research showed this still was not enough for lower-wage workers to make use of leave. In September 2022, California adopted SB 951, which—beginning in 2025—will raise wage replacement rates to 90 percent for California workers making less than 70 percent of the states average quarterly wage and 70 percent for other workers, up to a maximum benefit amount. The program improvement will be financed by eliminating a cap on taxable wages beginning in 2024, thereby making the contribution less regressive. This new blended rate will take effect in January 2025 and mirrors innovations in newer state programs’ wage replacement, described below.
• In July 2020, New Jersey implemented a suite of changes including to its wage replacement, raising it from 67 percent to 85 percent of a workers’ typical wages and substantially increasing the maximum benefit amount, though still maintaining a flat rate.

Rhode Island (60 percent) and New York (67 percent) also take this fixed percentage approach and have not updated their wage replacement rates since their programs were implemented.

Most newer programs have adopted a sliding-scale approach to paid leave benefit payments and provide higher wage replacement to lower-wage workers; this helps to make leave more affordable and accessible to people who are often living paycheck to paycheck.

• Washington state’s program, which began paying benefits in January 2020, pioneered progressive wage replacement, replacing 90 percent of wages for low-wage workers and a blended rate for everyone else.
• DC’s program, which began making benefits available on July 1, 2020, also adopts this sliding scale model, providing low-wage workers with 90 percent of their typical wages and a blended rate for middle- and higher-wage earners.
• Massachusetts’ program, which made benefits available for most purposes on January 1, 2021 and all covered purposes on July 1, 2021, replaces 80 percent of wages for lower-wage workers and offers a blended rate for others.
• Connecticut’s program, which began accepting applications in December 2021 and paying benefits on January 1, 2022, provides 95 percent of wages for lower-wage workers and a blended rate for all others.
• Oregon’s program, which began accepting applications in August 2023 and paying benefits on September 3, 2023, will provide low-wage workers with 100 percent of their wages and a blended rate for all others.
• Colorado’s program, which began accepting applications in December 2023 and paying benefits on January 1, 2024, will provide low-wage workers with 90 percent of their wages and a blended rate for all others.

Three of the four newest, soon-to-be-implemented state programs also embrace this model: Maine, Maryland, and Minnesota will provide up to 90 percent of low-wage workers’ typical wages. Delaware will follow the older model of using one wage replacement rate, but follows the best practices recommended by researchers to set wage replacement at 80 percent of a workers’ average weekly wage—a rate that will allow lower-wage workers to use the paid leave they need without falling into poverty and enabling middle-wage workers to continue to meet their basic household expenses.

The figure below shows the approximate benefit that workers at different wage levels can expect to receive in each state’s current or forthcoming program. Additional scenarios are illustrated in a supplementary table that shows approximate wage replacement for workers who are paid minimum wage, average weekly wages, or fractions or multiples of the state average weekly wage in each state. (Notes [3] to [16] below provide more information about wage replacement rates and links to state-specific resources.)

To compare apples-to-apples, we calculate benefits using the 2024 minimum wage and the state average weekly wages that will be used to calculate paid leave, workers’ compensation, or unemployment benefits in 2024. For programs that have not yet been implemented, benefit amounts shown are lower than they will be at the time of implementation because of forthcoming scheduled minimum wage increases and likely increases in the state average weekly wage. Benefit amounts are also not exact since most states use a look-back period on recent wages rather than the exact wage a worker typically receives at the time they take leave.

Comprehensive state programs are funded through small, mandatory payroll deductions from employers, employees, or both. Tax rates are no more than 1.4 percent in any state in 2024, and most are well below. In each state other than New York, the money is pooled into a statewide fund from which benefits are paid; in New York, private insurers and a state insurance fund, similar to a public option, exist side-by-side. [17]

In 2024, New York and Washington payroll contribution rates went down. In DC, a substantial decrease in payroll contributions that took effect in 2022 stayed in place in 2023 and 2024. In 2024, New Jersey maintained a policy it implemented in 2023 which eliminated workers’ contributions to paid medical leave; family leave contributions are up slightly from 2023 but still lower than 2022 levels at .09 percent. At the same time, in 2024, payroll contributions rose over 2023 in California and Massachusetts.

The two tables below (1) show the contribution levels for employees and employers and the taxable wage base on which premiums are calculated; and (2) provide context for what these contributions ”buy” in terms of the paid family and medical leave available to workers, including each state’s duration of paid leave. (Notes [18] to [31] below provide more information about payroll tax rates, benefit caps, and duration, along with links to state-specific resources.)

In brief, each state passed social insurance programs to provide paid leave and collect payroll contributions, and most administer benefits to workers who are eligible for paid family or medical leave. States need to build up their funds before beginning to make wage replacement benefits available to workers, which means there is usually a lag between the passage of legislation, the collection of premiums, and the availability of benefits to workers.

• California, New Jersey, New York, and Rhode Island have funded personal medical leave programs through Temporary Disability Insurance (TDI) through payroll contributions for decades, and each added paid family leave benefits funded in a similar way in 2002 (California), 2008 (New Jersey), 2013 (Rhode Island), and 2016 (New York). These programs began paying benefits to workers in 2004 (California), 2009 (New Jersey), 2014 (Rhode Island), and 2018 (New York).
• In July 2019, Washington state and DC started collecting the premiums to fund their new programs, the first two created from scratch. Washington began paying benefits in January 2020 and DC began paying benefits in July 2020.
• Massachusetts’ premium collections began in October 2019 and benefits became available to workers in 2021 over a six month phase-in: Personal medical leave, military exigency leave, and new child bonding leave began in January, and family caregiving leave began in July 2021.
• Connecticut began collecting premiums for its new program in 2021 and paying benefits in 2022.
• Oregon began collecting premiums in January 2023 and delivering benefits to workers in September 2023.
• Colorado began collecting premiums in January 2023 and delivering benefits in January 2024.
• Maryland will begin to collect premiums in October 2024 and start paying benefits in January 2026.
• Delaware’s contributions will begin in January 2025 and begin paying benefits in January 2026. Delaware’s model is different than other states: Employers will administer the program for their employees (e.g., determine eligible claims, make payments) and the state will reimburse employers and adjudicate appeals.
• Minnesota will begin collecting contributions and delivering benefits in January 2026; the legislation creating the program provided for general fund appropriations to make it possible for benefits and contributions to begin simultaneously—a novel feature of Minnesota’s legislation relative to other states.
• Maine will begin collecting contributions in January 2025 and paying benefits in May 2026.

The family caregiving portion of nearly all state paid leave programs allows workers to take paid leave to care for a range of family members—parents, spouses, children, and grandparents in all; and grandchildren, siblings, parents-in-law, and domestic partners in most—and seven newer or newly expanded laws also include “chosen” family members.

The funding for the programs is (or, for new programs is anticipated to be) sufficient to cover all the caregiving purposes and relationships that the laws include. Experience shows the inclusion of extended family members does not add appreciably to program costs and that broad family coverage is particularly important to ensure that people of color who disproportionately have extended family care responsibilities, LGBTQ+ people, and people with disabilities and their caregivers can realize the promise of paid leave programs.

Comprehensive, universal state paid leave models show that paid family and medical leave provides substantial financial security to working people at minimal individual cost, usually for an adequate number of weeks. Federal lawmakers can use these parameters to help design a national paid family and medical leave program.

Two new approaches to paid family and medical leave policy were put into effect in 2023 but have yet to show real impact. 2024 will be telling.

In New Hampshire, the Governor created a program that covers public sector workers with six weeks of paid family leave at 60 percent of their typical wages—this is substantially less time and lower rate replacement than in the vast majority of programs in states with comprehensive, universal policies. Private employers are able to purchase paid family and medical leave insurance through this plan if they choose to do so, and workers whose employers do not offer paid family leave insurance can purchase insurance privately and have premium contributions deducted from their paychecks.

Only one insurer (MetLife) bid for a contract with New Hampshire to provide this insurance product, and the rates they estimate charging employers are higher in most cases than payroll contributions in states with paid family and medical leave programs. [30] In 2023, only a tiny share of private employers and workers participated (“210 employers representing 9,096 workers and 644 individuals who bought coverage on their own,” according to New Hampshire Public Radio in December 2023). Vermont is in the process of adopting a similar system with the Hartford insurance company; state workers are covered as of mid-2023 while private employers and individuals will be able to participate beginning in July 2024 and July 2025, respectively.

In Virginia in 2022, the state legislature authorized its State Corporation Commission’s Bureau of Insurance to approve the sale of family leave insurance products in the state. There are no specific parameters that insurance products must offer in terms of duration, wage replacement, family members covered, or any other specific details. As of December 2023, just one insurer (AFLAC) is approved to offer a family leave insurance product, and there is no public information on whether employers have purchased it. In 2023, five additional states (Alabama, Arkansas, Florida, Tennessee, and Texas) enacted similar laws based on an insurance industry model bill. No information is available yet as to whether insurance companies have applied to offer products for sale to employers or individuals.

[1] Maryland’s program was initially to begin collecting contributions in October 2023 and paying benefits in January 2025; the bill had passed in a veto override vote in 2022 and the outgoing administration did not make as much progress as needed to meet this timeline. In May 2023, Governor Wes Moore signed legislation making adjustments to the program and providing a longer implementation timeline. See SB 828. This explainer presents details of the program as amended.

[2] Minnesota will simultaneously begin paying benefits and taking in payroll contribution premiums. The state bill appropriated general revenue to enable benefits and contributions to be able to begin simultaneously, rather than contributions beginning a year or more in advance of benefit payment availability; see Article 3. The Maine law passed as part of a budget agreement that goes into effect 90 days after the July 11, 2023, bill signing. This means that start-up funds to begin building the program will be available in October 2023; the program will begin collecting premiums in January 2025 and paying benefits in May 2026.

[3] In California, the benefit amount depends on highest quarter of earning during a base period (first four of last completed calendar quarters before starting date of claim). If the highest quarterly earnings are less than $928.99, the weekly benefit is $50; between $929 and around $7,350 is 70 percent of earnings; and workers receive 60 percent of earnings if they have higher quarterly wages. The maximum benefit in 2024 is $1,620 (unchanged from 2023). See California Employment Development Department and a table of benefits by prior quarterly earnings. Wage replacement rates will increase substantially in 2025 due to SB 951’s passage in 2022.

[4] In New Jersey, as of July 1, 2020, claimants are paid 85 percent of their average weekly wage. In 2024, the maximum weekly benefit is $1,055 per week. See New Jersey Department of Labor. Prior to July 2020, claimants were paid two-thirds of their average weekly wage, up to a maximum of $667 per week.

[5] In Rhode Island, wage replacement is equal to 4.62 percent of the wages paid to employee in the highest quarter of the base period. In 2024, the maximum benefit is $1,043. See Rhode Island Department of Labor.

[6] In New York, as of 2021 after four years of scaling up, the wage replacement rate reached its full amount of 67 percent of employee’s weekly wage up to 67 percent of state average weekly wage (SAWW). The maximum benefit in 2024 is $1,151. See New York Paid Family Leave. Temporary disability insurance has different wage replacement in New York, and the maximum benefit is just $170 a week; this is the only state in which TDI and PFL programs have different payment rates. Advocates are working to update TDI in New York.

[7] In Washington state, the wage replacement rate is 90 percent of the employee’s wage up to 50 percent of SAWW plus 50 percent of employee’s wage over 50 percent of SAWW. Maximum benefit in 2024 is $1,456 (90 percent of SAWW). See Washington Paid and Medical Leave.

[8] In DC, the wage replacement calculation is based on the minimum wage. The replacement rate is 90 percent of the employee’s wage up to 150 percent of DC’s minimum wage x 40 plus 50 percent of the employee’s wage over 150 percent of DC’s minimum wage x 40. Maximum benefit is $1,118 a week for 2024. See DC Benefits Calculator.

[9] In Massachusetts, wage replacement rate is 80 percent of the employee’s wage up to 50 percent of SAWW plus 50 percent of the employee’s wage over 50 percent of SAWW. Maximum benefit for 2023 is $1,149.90, which is 64 percent of SAWW. See Massachusetts Benefit Calculations.

[10] In Connecticut, the wage replacement calculation is based on minimum wage. Replacement rate is 90 percent of employee’s wage up to minimum wage x 40 plus 60 percent of employee’s wage over minimum wage x 40. Maximum benefit is minimum wage x 60, which is $941.90 in 2024. See Connecticut Paid Leave.

[11] In Oregon, the wage replacement rate will be 100 percent of the employee’s wage up to 65 percent of SAWW plus 50 percent of the employee’s wage over 65 percent of SAWW. Maximum benefit is 120 percent of SAWW and minimum benefit is 5 percent of SAWW. The maximum benefit when the program begins to compensate workers for paid leave in 2024 will be $1,523.63. See Paid Leave Oregon.

[12] Colorado’s wage replacement formula follows Washington state’s: 90 percent of the employee’s wage up to 50 percent of SAWW plus 50 percent of the employee’s wage over 50 percent of SAWW. The maximum benefit will be calculated at 90 percent of SAWW after January 1, 2025. For the program’s first year, the maximum benefit will be $1100; the statute does not specify a minimum benefit. See Article 13.3.

[13] Maryland’s wage replacement rate is 90 percent for workers with an individual average weekly wage that is 65 percent or less of SAWW plus 50 percent of wages that are above 65 percent of SAWW. The maximum benefit will be $1,000 a week for 2026 (the program’s first year) and will be adjusted annually beginning on January 1, 2027; the minimum benefit is $50 a week. See SB 275 (pages 22–23), amended by SB 828 in 2023.

[14] Delaware’s wage replacement rate is 80 percent of the individual’s average weekly wage, up to a cap of $900 per week in the program’s first two years (2026 and 2027), with annual adjustments thereafter. The minimum benefit is $100 a week (including full wage replacement for workers who make less than $100 per week but are otherwise eligible for the program). See Title 19 (page 5).

[15] Minnesota’s wage replacement is in three tiers: 90 percent up to half of SAWW; 66 percent of workers’ wages that fall between over half and the full SAWW; and 55 percent for wages that exceed the SAWW. The maximum benefit is the same as the SAWW, which is calculated annually. See Section 12, subdivision 3.

[16] Maine’s wage replacement rate is 90 percent for workers with an individual average weekly wage that is 50 percent or less of SAWW plus 66 percent of wages that are above 50 percent of SAWW. The maximum benefit is the SAWW, which is $1,103 as of July 1, 2023. See Section 850-C, page 327.

[17] Some states permit employers to self-insure or to purchase third-party insurance; the state regulates and enforces this process but, with the exception of New York, very few employers participate in these voluntary plans and participate in the state fund.

[18] California's law was passed in 2002, implemented in 2004, and has been amended multiple times, including in 2022 to greatly increase wage replacement beginning in 2025 via SB 951. The maximum length of family leave increased from six to eight weeks on July 1, 2020. See SB 83 and tax rates and wage bases. On January 1, 2021, individuals became eligible to receive up to six weeks of military exigency leave; see California Employment Development Department. In 2023, payroll tax contributions came down from 1.1 percent to .9 percent; beginning in 2024, to fund benefit expansions passed in SB 951, all wages will be taxable and the contribution rate is set at 1.1 percent.

[19] In New Jersey, 2019 legislation made changes to the state paid family leave program. Some changes took effect in January 2020 and others took effect on July 1, 2020. See tax rates and wage bases, and see TDI for workers and employers. Note that TDI contributions for employers varies based on how often their workforce uses TDI (”experience rating”); this is the only state to experience rate its TDI contributions. In 2023, for the first time, workers were exempted from paying any portion of the TDI premium; this exemption remains in 2024. Family leave insurance contributions were reduced from .14 percent in 2022 to .06 percent in 2023 and then ticked up slightly to .09 percent in 2024, still well below 2022 rates.

[20] See Rhode Island tax rates and wage bases. Rates came down between 2021 and 2022, from 1.3 percent to 1.1 percent of an employee’s wages, up to the taxable cap and remaining there for 2023 and 2024. Note that Rhode Island allows for a maximum of 30 weeks of combined annual disability and family leave. See Rhode Island Department of Labor.

[21] See New York tax rates and wage bases. The taxable wage base cap is equal to the SAWW. Employers are required to provide TDI and may take up to a 0.50 percent payroll tax from employees to cover benefits (but only up to $0.60 per week). New York’s paid family leave can be used for military exigency leave. Workers’ family leave contribution rate came down in 2023, from .511 percent to .455 percent, a 10 percent decrease, and dropped further in 2024 to .373 percent.

[22] See Washington state tax rates and wage bases. The taxable wage base cap is the Social Security cap. Small businesses with fewer than 50 employees are not required to contribute to premiums but are incentivized to do so. In terms of duration, some individuals can qualify for up to 16 to 18 weeks combined leave (e.g., individuals who experience complications in pregnancy may be eligible for 18 weeks of leave). Washington’s law includes military exigency leave; see Washington Paid Leave. In 2023, Washington began to allow seven days for a pregnancy loss or loss of a child. Washington’s contribution rate rose by .2 percentage points in 2023, from .6 percent to .8 percent, but dropped in 2024 to .74 percent. There is some evidence that their initial actuarial analysis may have been flawed and that, plus the pandemic utilization levels, led to the need to recalibrate.

[23] See DC tax rates. DC extended the duration of paid family and medical leave to a total of 12 weeks beginning in October 2022, up from an interim increase in 2021 and the program’s initial offering of just two weeks of paid medical leave, six weeks of paid caregiving leave, and eight weeks of paid parental leave. DC also offers two weeks of prenatal leave, as of October 2021; see DC Paid Family Leave. DC reduced employer payroll contributions from .62 percent to .26 percent in 2022 and kept premiums there for 2023 and 2024.

[24] See Massachusetts tax rates and wage bases. Small businesses with fewer than 25 employees are not required to contribute to premiums. The taxable wage base cap is the Social Security cap. Note that the maximum length of leave is capped at 26 weeks per year (12 weeks of family leave, 20 weeks of medical leave, and 26 weeks to care for a wounded service member). See Massachusetts Family and Medical Leave. Massachusetts’ contribution rate dropped from .68 percent in 2022 to .63 percent in 2023, but jumped to .88 percent in 2024.

[25] See Connecticut tax rates and wage bases. Employees began making contributions on January 1, 2021, and the program began accepting applications for leaves in December 2021 for leaves that were to begin on or after January 1, 2022. Workers pay the .5 percent payroll tax rate, which has been stable for all program years, including 2024. The taxable wage base cap is the Social Security cap. Note that the maximum annual length of leave is 12 weeks plus an additional two weeks for a health condition resulting from pregnancy. Connecticut’s law includes both military exigency leave and ”safe” leave for survivors of family violence. Connecticut caps military exigency leave at 26 weeks per two-year period.

[26] See Oregon tax rates and wage bases. Workers and business contribute 1 percent of payroll. The taxable wage base cap is the Social Security cap. Oregon’s law includes “safe leave” for survivors of domestic violence, sexual assault, and stalking. Small businesses are not required to contribute to the program, similar to Washington state and Massachusetts.

[27] In Colorado, the statute prescribes tax rates and wage bases, set at .9 percent contributions split between workers and employers for the program’s first two years, including 2024. The taxable wage base is the Social Security cap. Small businesses are not required to contribute to the program, similar to Washington state, Massachusetts, and Oregon. Colorado’s law includes both military exigency leave and “safe” leave for survivors of domestic violence, stalking, and sexual assault. See Colorado Department of Labor and Employment.

[28] In Maryland, workers and employers in 2024 will contribute .9 percent, shared equally. Maryland’s law also includes employer-side contribution exemptions for businesses with fewer than 15 employees, similar to small business exemptions in Washington, Massachusetts, Oregon, and Colorado. The taxable wage base is the Social Security cap. Maryland’s law covers military exigency leave. See Maryland Department of Labor.

[29] In Delaware, the statute prescribes the tax rate but does not specify a limit on the taxable wage base. Delaware’s contribution amounts are subdivided by statute for each type of leave—parental (.32 percent), medical (.4 percent), and family care (.08 percent)—and the statute includes a trigger that would reduce benefit levels if contribution amounts exceed 1 percent. In addition, coverage and eligibility rules are restrictive: Businesses with fewer than 10 employees are not covered, either for contributions or for benefits to workers, and businesses with 11 to 24 workers only contribute for parental leave and their employees are only covered for parental leave. Even within covered businesses, only workers who meet FMLA eligibility criteria are eligible for paid family and medical leave benefits. Delaware’s law includes military exigency leave. See Delaware Department of Labor.

[30] In Minnesota, the statute sets the initial contribution rate at .7 percent for the full suite of paid family and medical leave benefits through the public program, and also permits employers to purchase either type of leave separately with the other type covered by the state program at a reduced cost. Employers are able to seek 50 percent of the premium cost from employees. Businesses with fewer than 30 employees may exclude a portion of payroll expenses ($12,500 for each employee, up to $120,000) for the first 20 employees, and $12,000 for the 21st through 29th employee. Employees must still pay the employee portion of the premium and are not affected by this wage exclusion. See Section 19, subdivision 5.

[31] In Maine, the statute sets a maximum initial contribution rate of 1.0 percent. Employers with 15 or more workers must pay 100 percent of premium cost and may seek 50 percent from their employees; in businesses with fewer than 15 workers, employers remit only 50 percent of the premium, which is deducted from employees’ pay. See Section 850F, page 330. Maine’s law covers both “safe” leave and military exigency leave.

[32] MetLife’s filings in New Hampshire are available here (tracking numbers META-133327697 and META-133327714). A spreadsheet submitted with likely rates for employers in different industries and with different workforce demographics shows a huge variation in expected rates, many exceeding the cost of paid leave in states with universal, mandatory contributions.