Paid leaves can be confusing to navigate. As the legislative landscape continuously evolves, even the most seasoned business owners may find it hard to stay up to date on the latest regulatory changes. We’ve compiled a few important reminders for your clients to keep in mind through the 2024 work year.
Contribution Considerations: Delaware, Maine and Maryland
Employee contributions are a critical piece of Paid Family and Medical Leave (PFML) program funding. Employers with a multi-state (or remote) workforce should start to think about their employees’ contributions as three more states implement PFML benefits. Contributions for Maryland will begin in October of 2024, while Delaware and Maine will begin in January of 2025. Why should employers be aware of other states’ leave laws?
COVID-19 altered the way many employers and employees thought about their work-life balance, leading some to make major life changes. Your client may have required a heavy in-office presence before the pandemic and shifted to remote work to comply with local, state or federal “stay at home” orders. Perhaps some employees took that opportunity to relocate out-of-state while continuing to work from home. This could mean that your client’s employees live in states that now require employers to offer different benefits than those they provide to employees who remain at the company’s home state of record.
Even if your client’s business isn’t headquartered in a state that has passed PFML laws, it’s still important for them to recognize the gravity of this growing trend in state-mandated legislation. The states highlighted here are just the latest to pass mandates. The momentum of the PFML movement is not slowing down. Engaging resources to help administer leave policies could be key to remaining compliant with state regulations while positively impacting your client’s ability to attract and retain talent.
Think Twice Before Going It Alone: Self-Funded or Fully-Insured?
Several state mandated programs give employers the flexibility to offer a private plan equivalent through an insurance carrier as an alternative to a state-administered program. Many private carriers permit employers to fully insure this risk or self-fund the state program, like the way they may self-fund their short-term disability program.
However, your mid-size clients may find it difficult to gauge which program is best for them. When they’re setting aside funds to ensure family or medical leave claims can be paid, data is everything. Attempting to self-fund or self-administer a leave program can prove risky.
“There’s a lot of volatility when it comes to self-funding these types of claims,” says Grant Van Der Beken, regional sales director for Group Benefits at The Hartford. “While some of the world’s largest companies have the staff and resources on-hand to accurately pour through the company’s historical claim data, many mid-sized companies don’t have those tools at their disposal.”
Many states have adopted a Paid Family Leave model that permits employers to offer it on an optional basis, similar to short and long-term disability, and this trend will continue. When leaves are combined or work in tandem to cover an employee’s absence, overpayment is certainly a risk when self-administering.
“Partnering with an experienced, multi-dimensional insurance carrier like The Hartford can be a game changer for companies wishing to ensure the best results for their bottom line. It can ease the administrative burden while also dedicating a quality customer experience that focuses on the needs of the individual claimant,” said Van Der Beken.
PFML Education: It’s Not Just for Employees
From July 2021 to June 2022, the overwhelming majority of PFML benefit applicants in Massachusetts fell into two categories:
- Employees who took leave for their own serious health conditions (46.93%).
- Employees who took leave related to pregnancy, recovery from childbirth, or to bond with a child (42.98%).1
That’s nearly 90% of all applicants. Traditionally, these are the coverages that first come to mind when people think about PFML. So, what about the remaining claims?
Of those filed and approved, 10% were leaves related to the care of a family member. With the U.S. Census Bureau declaring that all baby boomers will be 65 or older by 2030, more employees will need to take leave to care for an elderly relative at some point.2
“We certainly expect that number to grow from 10% in the future," said Sharon Andrus, head of paid family and medical leave for Group Benefits at The Hartford. “It’s critical that employers understand the potential impact to their workforce and embrace it, especially as they’re looking at their overarching paid leave benefit strategy, because it could become a deal-breaker when attempting to attract talent.”
If your clients have workers in states with paid leave laws, we can help them successfully prepare for 2024 and beyond with the right product offering and leave management approach.
An Insurance Carrier Your Clients Can Trust
Our clearly defined PFML strategy can make all the difference when your clients are looking for a leave management partner. We offer a smooth employee experience throughout an absence’s lifecycle and can capture key data employers need under one roof. These capabilities are critical for multistate employers as they navigate the paid leave landscape.
The trend of states implementing PFML programs or making paid family leave available to employees isn’t stopping. Several states have bills pending in their legislatures. Your clients need a leave insurance carrier that is multi-faceted and can help them meet the often-complex state requirements.
To learn more about PFML and view a helpful state-by-state breakdown, visit our PFML Resource Center.
