Paid Family and Medical Leave Programs: Keep Up with the New Trends!

by Shelby Felton, Esq. - Director and Product Compliance Counsel

& Lana L. Rupprecht, Esq. - AVP, Product Compliance

& Marti Cardi, Esq. - Senior Compliance Consultant and Legal Counsel,

May 22, 2023

 

As many of you know, several states have adopted mandatory paid family and medical leave (PFML) programs that are overseen by the state and funded by employee payroll taxes and/or employer contributions. But more and more states are offering alternative models of such programs.

Voluntary Programs

One approach to PFML programs that seems to be growing in popularity is making participation in them voluntary for private employers, rather than mandatory. These "voluntary" programs outsource administration of the program to an insurance company through a bid system, rather than keeping that administration inhouse by the state. Benefits in these plans are provided initially to state employees. Private employers may then opt into the program by purchasing a plan from the state-contracted insurer. Tax incentives may be offered to employers that opt into the program. Most also have provisions allowing individual employees to opt in if they are not covered by an employer's plan.

New Hampshire was the first state to introduce this concept, with benefits starting just this year on January 1, 2023, which we previously discussed in our blog here.

This was followed by Vermont which will offer benefits first to state employees on July 1, 2023, and then, expand for private and non-state public employers to opt in beginning July 1, 2024. Read more about Vermont's program here.

Statutes Adding Paid Family Leave as a New Line of Insurance

Many employers already offer disability benefits as part of their employee benefits packages. Disability insurance has long been available if employers don't want to fund these benefits directly, but that hasn't been the case with paid family leave (PFL). Now, state legislation to allow insured PFL by approved insurers is actively trending. This type of program creates a private marketplace for voluntary PFL similar to the current disability insurance offerings.

Virginia passed a law effective June 1, 2022, enabling insurance companies to offer PFL products as a new line of insurance. You can find more information about Virginia's statute in our prior blog here.

Joining the trend, the states summarized below passed (or are about to pass) laws in 2023 similar to the Virginia law. We expect to receive additional guidance from each respective state's department of insurance.

Alabama

On May 4, 2023, the Paid Family Leave Income Replacement Benefits Act (House Bill 141) was passed in Alabama with an effective date of August 1, 2023.

Under this law, disability insurers may offer PFL benefits through employer-sponsored group insurance policies or voluntary purchased employee policies.

Reasons for leave include:

  • Care for a family member with a serious health condition
  • Bond with a new child
  • Addressing a qualified exigency as defined by the federal Family and Medical Leave Act (FMLA)
  • Care for a service member injured in the line of duty
  • Other family leave

Currently, the length of leave entitlement may not be less than 2 weeks during a 52-week period.

Arkansas

Arkansas passed Senate Bill 111 this year, effective June 9, 2023, permitting insurers to offer PFL insurance. PFL insurance may be written as an amendment or rider to a group disability insurance policy, a separate group insurance policy purchased by an employer or included in a group disability income insurance policy.

Reasons for leave include:

  • Birth or adoption of a child or placement of a foster child
  • Care of a family member with a serious health condition
  • Circumstances arising because the employee's family member, who is a service member, is on active duty or has been notified of an impending call or order to active duty.

The amount of leave that must be offered is not specified in the statute.

Florida (Pending before Governor)

Florida House Bill 721 has been passed by the state legislature and is awaiting signature by the governor. This bill would add PFL insurance as a type of insurance that can be issued to and purchased by an employer as an amendment or a rider to a group disability income policy, included in a group disability income policy or issued as a separate group insurance policy.

Reasons for leave include:

  • Care of a family member with a serious health condition
  • Bond with a new child
  • Addressing a qualifying exigency as defined by the FMLA
  • Care for a family member injured in the line of duty with the Armed Forces of the United States
  • Other family leave

Currently, the length of leave entitlement may not be less than 2 weeks during a period of 52 consecutive calendar weeks.

Tennessee

The Tennessee Paid Family Leave Insurance Act (HB 609), effective January 1, 2024, authorizes life insurance and disability income insurance companies to issue policies for PFL insurance. The insurance may be written as an amendment or rider to a group disability income policy or life insurance policy, included in a group disability income policy or life insurance policy, or a separate group insurance policy purchased by an employer.

Reasons for leave include:

  • Birth or adoption of a child or placement of a foster child
  • Care of a family member with a serious health condition
  • Leave needed due to the status of a family member who is a service member on active duty or who has been notified of an impending call or order to active duty

The amount of leave that must be offered is not specified in the statute.

Other Pending PFL Insurance Legislation

We are currently monitoring legislation in Minnesota, South Carolina, and Texas that may allow voluntary private marketplace PFL insurance in those states.

Will Reliance Matrix offer PFML plans under these new laws?

Reliance Matrix is currently evaluating the opportunities and requirements for paid family leave insurance in the states where it will be permitted. Please check in with your account manager if you have questions.

Resources: Our Statutory Disability and Paid Family Leave Laws Web Page and The Map

Meanwhile, state paid family and medical leave programs in various forms continue to be introduced, amended, and implemented throughout the country, making it difficult for employers to keep track.

But, Reliance Matrix has a couple of tools updated in real time that can help you!

  • Check out our Statutory Disability and Paid Family and Medical Leave web page which summarizes these leaves here!
  • Also, Reliance Matrix uses a legislative tracking system to advise our clients. Every day we track when new paid family and medical leave legislation is introduced, how it travels through committees, and when it is amended, passes, or fails or whether no action is taken because the session ends. Check out the current version of the legislative map that Reliance Matrix updates in real time. You can always get the latest copy from your account manager.

Matrix Can Help!

Reliance Matrix is a branding name for Reliance Standard Life Insurance Company and its affiliated insurance and absence management services companies. Insurance products are provided by Reliance Standard Life Insurance Company (Home Office Schaumburg, IL), which is licensed in all states (except New York), the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam, First Reliance Standard Life Insurance Company (Home Office New York, NY), which is licensed in New York and Delaware; Standard Security Life Insurance Company of New York (Home Office New York, NY), which is licensed in all states. Absence services are provided by Matrix Absence Management, Inc. (Home Office Phoenix, AZ).

Through its insurance and administrative services entities, Reliance Matrix offers integrated leave management services involving the FMLA, state-mandated paid family and medical leave and accommodation solutions. Product features and availability may vary by state. For more information, please contact your Reliance Matrix account manager, or reach us at [email protected].