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Sheila McGarrigle
/ Categories: Premium/Withholdings, Q&A

Difference Between PFL Premium Payments and Payroll Deductions

October 30, 2018

Woman Reviewing PFL Premiums

Because Paid Family Leave is new to New York State, many employers still wonder who actually pays for PFL and how. We’ve heard questions from employers like, “Wait, why am I being charged for PFL insurance? I’ve set up payroll deductions for that” or, “How do I pay for PFL?”  So, how do you handle PFL premium payments and withholdings?

The difference between PFL premium payments and payroll deductions may be surprisingly simpler than you’d think once you read the answers to these top 2 questions. So, let’s get to the bottom of this!


My payroll system withholds PFL from my employees’ wages. Doesn’t that mean my premium is paid? Why do I still get a bill?

No, if you withhold PFL from your employees’ wages to cover the cost of PFL premiums, it doesn’t automatically mean that the premium is getting paid. While payroll systems offer the convenience of automated payroll withholdings, they don’t transfer funds to your insurer to pay your premium: there’s typically no direct connection between your payroll system and your insurance carrier. This means that when the payroll provider withholds wages for PFL, the funds are withheld from the employee, and remain in your (the employer's) accounts. This leaves it up to you, the business, to pay your premium separately from the payroll process.

Paid Family Leave was designed to be and is often times called employee funded, which may be a source of the confusion – but that doesn’t change how premiums get to the insurance carrier. In fact, it works just like with any other traditional group benefit for which you recoup all or some of the premium through payroll deductions.

We recommend you speak to your payroll provider if you have questions about your account, as this information may vary by provider.


How do I pay my PFL premium? 

For a detailed, specific answer to this question, you should contact your PFL insurance provider.

However, for a useful, general answer, the following can help you understand the basics:

First, as mentioned above, you can withhold employee contributions to cover the cost of your business’ PFL premium; however, it’s not required that you do so. If you choose withholding from employee wages to pay for PFL, you’ll need to set up your payroll to withhold pay from your employees. The calculation for withholding pay must follow New York’s rates. The PFL rates/maximum employee contribution are set by New York State each year.

Apply the current PFL rate to the employee wage. For employees whose wage is above the NYS Average Weekly Wage (NYSAWW), their withholding will be capped. See the chart below for details.


PFL rate

Annualized NYSAWW

Maximum annualized contribution per employee










While withholding deductions happen based on your payroll cycle (such as weekly, bi-weekly, monthly), that’s not how your premium payment schedule works! Premium payment frequency depends on your billing cycle.

As mentioned above, your payroll system will not move the funds that you’ve withheld to your insurance provider. Instead, those funds will remain in your account, and you can apply them when it’s time to pay your premium.

Annual premium invoices are typically paid in advance, which means they will be based on an estimate at the beginning of the billing cycle for your next 12 months with a true-up (also called reconciliation) for actual vs. estimated wages during the prior 12 months. Quarterly and monthly invoicing generally is done in arrears (but can also be done in advance depending on the carrier).

Your premium is calculated using the same rates and cap as used for calculating withholding. Your insurance provider will help you walk through the calculation.

If you happen to provide PFL coverage through ShelterPoint Life, our invoices are set up like a worksheet to guide you through the necessary calculations; or even better yet, you can use our ePay portal to pay your premium – it does the math for you and has intuitive help built in!

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This blog post 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 PFL information is as of the blog post’s date stamp; it is based on the applicable statutes and regulation,  and may change as regulations evolve or NY State issues guidance regarding Paid Family Leave regulations. Have more questions? Email us at pflquestions@shelterpoint.com

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