By now, most Maryland employers are familiar with the basics of the Family and Medical Leave Insurance (FAMLI) program. You've likely registered your organization, started learning about upcoming requirements and have begun thinking about how the program will impact your workforce.
Now comes one of the most important decisions employers will face: whether to participate in Maryland's state-administered FAMLI plan or pursue an approved private plan. The choice can affect everything from administrative responsibilities and payroll processes to long-term costs and employee experience.
While many employers will remain in the state plan, others may find that a private plan better aligns with their workforce, benefits strategy and administrative needs. Understanding the differences now can help you make an informed decision and avoid missing important deadlines.
Understand the State Plan
Once an employer registers for Maryland FAMLI, they are automatically enrolled in the state plan unless they pursue and receive approval for a private plan. Under the state plan, Maryland's FAMLI Division will administer the program, collect contributions, process claims and issue benefits to eligible employees.
Beginning January 1, 2027, employers and employees will begin funding the program through payroll contributions in advance of benefits becoming available on January 1, 2028. The current state contribution rate is 0.9% of covered wages, up to the applicable annual Social Security wage cap, with up to 0.45% withheld from employees and the employer paying the balance. Employers with fewer than 15 total employees, including out-of-state employees, are exempt from the employer share.
For many organizations, the state plan may offer simplicity. The state handles benefit administration and claim processing, reducing the employer's direct involvement in managing leave claims.
Understanding Private Plans
Employers also have the option of offering an approved private plan in place of the state plan. Private plans must provide benefits and protections that are equal to or greater than those available under the state program and must receive approval from Maryland's FAMLI Division.
Unlike the state plan, private plans establish their own contribution rates and administer their own benefits. Depending on the plan design, employers may benefit from enhanced administrative support, streamlined claims processing and different funding structures.
It's important to note that even if a private plan's total cost exceeds the state's contribution rate, employers cannot deduct more than the employee share under the state plan, currently 0.45% of wages up to the annual Social Security wage cap. Any additional cost must be absorbed by the employer. Contribution requirements begin January 1, 2027, but employers may cover the employee share instead of withholding it. All employers, regardless of plan type, must submit their first quarterly wage and hour reports by April 30, 2027. Private plans must also report claims data once benefits begin.
If you're considering a private plan, now is the time to begin conversations with your insurance broker or benefits advisor.
Commercial Versus Self-Insured Private Plans
Private plans generally fall into one of two categories.
Commercial Private Plans
A commercial private plan is purchased from an insurance carrier. The carrier is responsible for processing claims and paying benefits to eligible employees.
For many employers, this option provides a balance between maintaining an alternative to the state plan and outsourcing much of the administrative burden associated with claims management.
Self-Insured Private Plans
Under a self-insured plan, the employer assumes responsibility for funding benefits and administering claims, either internally or through a Third-Party Agent (TPA).
Employers with 50 or more employees can apply for a self-insured private plan. Employers with fewer than 50 employees can also apply if they had a FAMLI-compliant plan in place by July 31, 2026. Employers pursuing this option should be prepared for additional administrative obligations and compliance requirements.
Questions to Consider Before Choosing a Plan
There is no one-size-fits-all answer when it comes to FAMLI compliance.
As you evaluate your options, consider:
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How much administrative responsibility your organization wants to retain
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Whether your current leave programs could be coordinated with a private plan
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The potential cost differences between state and private options
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The level of support available from your insurance broker or benefits consultant
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Your long-term workforce and benefits strategy
For some employers, simplicity may make the state plan the best choice. For others, a private plan may offer greater flexibility and efficiency.
If you are considering a self-insured plan, you can download the Self-Insured Plan Application Preview to understand the upcoming requirements prior to formal applications being accepted in 2027. Employers applying for a private plan will need to pay an annual application fee based on plan type and employer size. Annual application fees range from $100 to $1,000.
Important Rules About Switching Plans
Employers that choose a private plan should be prepared to remain in that plan for at least one year. After that period, employers can apply to move to a different private plan or transition back to the state plan. Similarly, employers participating in the state plan can later pursue a private plan, provided the transition does not create a lapse in employee coverage.
Before making any changes, employers should carefully consider the financial and administrative implications. Employers whose accepted Declaration of Intent (DOI) allowed them to avoid remitting 2027 contributions can owe those contributions plus interest if they join the state plan in 2028, or half those contributions plus interest if they join in 2029. Additional penalties may apply.
Once you've evaluated your options, it's important to understand the deadlines associated with pursuing a private plan. Missing those deadlines could limit your flexibility and create additional administrative challenges.
Don't Miss the November 15, 2026 Deadline
For employers interested in pursuing a private plan and avoiding remitting contributions to the state during the 2027 seeding period, one date is especially important: November 15, 2026.
By that date, employers must submit a DOI indicating their intent to pursue a private plan.
This deadline is significant because it allows employers to hold contributions in escrow while awaiting approval of their private plan application rather than remitting those funds to the state.
However, employers should understand that the DOI is not simply an expression of interest. It is a legally binding filing that carries ongoing obligations once submitted. Employers cannot revoke it or the related escrow obligations, and must apply for a private plan by October 1, 2027.
Before Submitting a DOI
Employers planning to submit a DOI should:
Register for FAMLI
Registration must be completed by an Authorized Officer before a DOI can be submitted.
Consult With an Insurance Professional
A licensed insurance agent or other representative of an insurance company in Maryland must complete and sign the required DOI consultation form.
Submit All Required Documentation
Only Authorized Officers can submit a DOI for an employer. Incomplete, unsigned, unreadable or improperly submitted forms may be rejected by the FAMLI Division.
Monitor for Approval
The FAMLI Division will notify the Authorized Officer of the DOI decision within 15 business days of submission.
What Happens After a DOI Is Approved?
Employers with an approved DOI will begin collecting contributions on January 1, 2027, but they will not remit those contributions to the state. Instead, the amount that would have been due to the state must be held in a separate escrow account while the employer's private plan application is reviewed. Employers can collect contributions from their employees or self-fund the escrow account. Employee deductions must be deposited immediately after each pay period; employer contributions are due by the quarterly deadline. Certain governmental employers have an escrow exception.
What ultimately happens to those funds depends on the outcome of the private plan application:
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If the employer joins the state plan or the private plan application is denied, escrowed contributions must be remitted to the state, and interest or penalties may also be due
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If the employer is approved for a commercial private plan, employee contributions and the interest earned on them must be returned to employees
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If the employer is approved for a self-insured private plan, escrowed funds may be transferred to a separate account used solely for FAMLI benefits, or employee contributions and their interest must be returned to employees
Start Evaluating Options Now
Waiting until the November deadline to evaluate private plan options could limit your choices and create unnecessary administrative challenges.
Whether you ultimately choose the state plan or a private plan alternative, now is the time to begin discussions with your broker, review potential costs and understand the long-term implications of each approach.
The Maryland Department of Labor also offers FAQs, employer resources, webinars and program updates that can help employers better understand their responsibilities and available options. Employers evaluating state and private plans may find these resources particularly valuable as they compare plan structures, understand filing requirements and prepare for upcoming deadlines.
Need Help Evaluating Your FAMLI Options?
Choosing between the state plan and a private plan is one of the most important decisions Maryland employers will make as FAMLI implementation approaches.
Gross Mendelsohn's FAMLI resource, Karen Hess, works with employers to understand compliance requirements, evaluate state and private plan options and prepare for upcoming implementation deadlines with confidence.
If you have questions about contribution requirements, private plan considerations or the November 15 DOI deadline, we're here to help. Contact Karen here or call 800.899.4623.
