What’s next for private plans in Oregon and Colorado?

Oregon and Colorado are the next two states developing paid family and medical leave (PFML) programs with private plan options. In this episode of Lincoln Absence Advisor, we explore where each state stands, what we know about their private plan processes, and what employers should consider when deciding whether to opt for a private plan. Lincoln leave professionals will also help employers who have chosen a private plan focus on what needs to be done now, what’s coming next, and what remains to be decided by each state. 

Resources mentioned: Episode 46 - State vs. private plans: Conversations and considerations

© 2022 Lincoln National Corporation. All rights reserved.  LCN-4983092-100622

Transcript

Karen Batson: 0:01

Hi everyone. This is Karen Batson Marketing Manager at Lincoln Financial Group. We've discussed many paid family and medical leave programs on the show and today, we're going to talk about two states that we've actually talked about before Oregon and Colorado. But more specifically, we're going to talk about what we know about the private plan process in each of those states. I'm joined by Marissa Mayfield, who's a product lead for Oregon product, and Kristin Seidman, who's our product lead for the Colorado product. And we discuss what we know what we don't know what's on the horizon, and some questions that they've been getting as these programs are developing. I hope you enjoy today's episode. Hi, ladies. Thanks for joining the podcast again.

Kristin Seidman: 0:46

Good morning, Karen.

Marissa Mayfield: 0:47

Hello!

Karen Batson: 0:48

We're back and talking about Colorado and Oregon. I think the last one you guys were on we were talking about the same states, but we're gonna change it up a little bit. You guys are frequent guests of the podcast. But I feel like we should still do introductions in case we have some new listeners. Do you mind introducing yourselves and how you're connected to our topic today?

Kristin Seidman: 1:05

Sure. Something this is Kristin Seidman and I am product lead for Colorado PFML Hi, everyone. I'm Marisa Mayfield. I am Kristin's partner in crime, working on Oregon paid family leave, and the two of us work on a number of other state programs here at Lincoln. So it's always fun to come and talk about the work that we're doing.

Karen Batson: 1:29

So we're gonna spend, I think pretty much the whole conversation talking about the private plan option, the process what we know what we don't know. But before we dive into that, can we give an update on where the development is of each program? As it stands today?

Marissa Mayfield: 1:44

Yeah I can start for Oregon. So there's a

Kristin Seidman: 1:44

And I'll jump in for Colorado, I have many of lot going on in Oregon, it's actually been really good to see all the progress that they've been making. So from a rulemaking standpoint, because that's one of the most important things that's happening right now. They are finalizing the remaining batches of rules that are in development. And so hopefully over the next few weeks or so we'll see them the same updates that Marissa shared for Oregon, Colorado complete the full rulemaking process. It's certainly been an effort over the last few months to get all that built out for everyone to administer. The states also have been hosting education sessions over the last few months. So that's been sessions for topics around the program in general talking about equivalent plans in particular, and they're really going to continue to ramp up the community education efforts to ensure that everyone is ready as the program launches next year. And then one key milestone that was just a few weeks ago was September 6, this is when they opened their new portal for employers, it's called Francis online. And this is where all employers of have workers in Oregon will have to go register to set up an account. And both those that are participating in the state versus those that are having an equivalent plan. There's different functions that are going to be occurring within Francis online. And so between opening up the registration on September 6, as well as opening up the declaration of intent process in the equivalent plan application, which we'll talk about in a bit. But that was a big milestone date that they had been working towards for some time. And it was good to see that everything seemed to to launch effectively. rulemaking is well under way, the rules for benefits and employer participation were adopted in August at the end of August. And then we have two different sets of information with respect to private plans. So private Plan Guidance, which is different than private plan rules, was published last month, the private Plan Guidance gives us some insight into what the state is expecting to have happen. And then we have a draft of the private plan rules that's out there for comment. The comment period closes October 18. So coming up fairly quickly. And after that, we'll expect to see those rules finalized. And we'll have a lot more information to share. Similar to Oregon, the state of Colorado is conducting a lot of education. So there's been town halls across the state. There's a lot of information and recorded webinars also on their website. So there's some really helpful information out there for folks that are interested.

Karen Batson: 4:28

Have you guys been able to join the webinars that you both mentioned, were they valuable to you? From your point of view?

Kristin Seidman: 4:34

I've listened to a couple of the pre recorded webinars and they are helpful. There's some good questions that get posed and some good information that's shared. Yeah. And I am joined primarily the equivalent plan sessions that were held over the last I think six weeks or so it was quite an extended period of time that they posted those sessions to allow people to come on weekly to ask questions and we really use that opportunity to clarify some of the expectations for the private plans. So yeah, I think it was a good use of time.

Karen Batson: 5:04

Now, before we get into specifics, you know, as organizations, employers are making decisions about whether they want a private plan in the States, what comes to mind as to why they would go towards a private plan from your perspectives?

Kristin Seidman: 5:18

I think it's a good question. And I'm just gonna answer kind of broadly, I think, and I know we've we've talked about this before, but employers really want to look at their overall absence strategy. And if that includes, you know, having absence, so paid family leave for miles, short term disability, those sorts of things outsourced and they're looking for a single source of administration, I think that's a key to, you know, potentially looking for a private plan. large populations in this state may also be a reason to look at private plan opportunities. I do think it's important for employers that are thinking about a private plan to understand the timeline and the requirements. So it'll be close to, it'll be important to stay close to that as more information from both states becomes available. I will just add on Kristin really touched on the majority of the key things that employers need to think about a couple of things that also come to mind is the employee experience and employer experience and how that can be simplified when you're working with just one vendor or carrier that's administering multiple programs, in addition to the fact that oftentimes employers can have more or better visibility into an employee's leave their reporting that they would otherwise not necessarily have access to with a state, in addition to the fact that an employer may look to provide a greater level of benefit than what's available under the state and so that they might have more flexibility. And then lastly, but certainly not least, there are opportunities at times where an employer might see some cost savings in establishing a private plan. And so when you think about all those things together, the employers objectives, and then all the different levers that really matter to them. A lot of those things can be helpful considerations in determining whether to go private or not. Karen, do you have a podcast on this?

Karen Batson: 7:10

We did good mention, we'll plug that. I'll link to that in our show notes for other people who listen, but we actually had some members of our account management team join us and talk about questions they get asked and how they help through that decision. So it might be helpful for our listeners. Thanks for mentioning it, Kristin. Let's dive into Oregon specifically. So starting with the basics, what information do we know? And what are we still waiting to learn when it comes to the private plan process or equivalent plan process?

Kristin Seidman: 7:42

I know every state has their own take on what they want to call the plan. So it's like you just have to know the lingo. In the case of Oregon with the equivalent plan, there's a few things to keep in mind, there are quite a few different activities that are occurring that are dependent on being complete before an employer is able to actually go ahead and do the formal or the full blown application. And so for most employers, we see when a fully insured option is available, most employers are inclined to select that. And so because a filing is required in Oregon, of both the form, which is the policy that a carrier would use, as well as the rates, which is kind of a new thing that's emerged in Oregon, for us also have to file rates. All that work has to take place before an employer can actually proceed with their application. And so the fact that all that guidance is still underway, we do have a draft of what some of the state's expectations are, but there are going to be some updates and changes over the next few weeks. And so it's still TBD when and and a carrier will be given the green light of being able to proceed with that submission of their filing. And so it's been helpful that the state has established a declaration of intent process, which really is almost like a placeholder that they'll be able to say it's my intention to establish an appropriate plan that will meet all the requirements. However, I'll need to hold off on when I can submit that. And so the declaration that allows them to do that in a very straightforward fashion, it's an online attestation. No document has to be submitted. There's no super involved process and going through that. It's really just kind of raising your hand to say this is my intent.

Karen Batson: 9:39

Did we do something similar for Connecticut and Connecticut established something similar in regards to that process?

Kristin Seidman: 9:45

Yeah, this is not the first state that we've seen with the declaration of intent.

Karen Batson: 9:49

And it worked well there right?

Kristin Seidman: 9:51

It did. Yeah So with with Oregon, they established a short window for the declaration. So with the application process opening on September 6, they have until November 30, to submit that declaration. And so that's a hard deadline. Anyone that misses that date, unfortunately, is going to have to wait until their ability to do the formal kind of full application. And so it's important whether an employer is absolutely certain that they're going private, or even if they're considering it, being able to do that declaration says, you know, let me hold my place that I intend to do this. And then, you know, if they change their mind later, there's time to be able to back out that declaration and still enter the state plan. And then otherwise, for those that will continue with the process, they have until May 31, of 2023, to actually do their full application, which is going to give the carrier enough time to get their forms, approve their rates approved, provide the documentation that's necessary for them to actually then go through the process at that time.

Karen Batson: 11:03

So my next question was going to be what could an employer start doing now? But you've kind of already answered that question. So, you know, as people are starting this process, what kind of questions are you seeing? And how have we answered them or been able to help?

Kristin Seidman: 11:16

You know, it's interesting, the questions are all over the board. I think, with these programs as they emerge, it brings kind of a flurry of questions to employers, sometimes some anxiety, just to be honest of what's the impact going to be to my employees, to my workforce management and all of that. So apart from all the questions that we're getting about very detailed claim aspects and the job protection and how all that works, I think the big part right now is just knowing what they need to do at this present moment to keep progressing in the process. One thing I didn't mention as relates to the application process for the equivalent plan. So once we're at the point where it's time to initiate that process, for any Lincoln client, it's our intention and plan to notify you of when that is what you'll need to complete the application, there is an application fee of$250 for each business entity that's going to be covered under the plan. That fee is due when you actually submit the application, the full blown application, that's when that's due, it's not due with the declaration. So you don't submit that upfront. And then there's also going to be a kind of a sample policy that we will provide that the employer will submit, which is representative of what their coverage is going to be with us. So that's really it in a nutshell. And then we'll have more detail with some of like some of the more finite aspects of it. But at a high level, those are the main things that keep in mind.

Karen Batson: 12:51

Let's shift gears to Colorado. So where are we? What do we know? And what do we not know?

Kristin Seidman: 12:58

Okay, good questions. I'll start with what we know. And that all comes from the private Plan Guidance, again, different from private plan rules. We know that. And let me take a step back. So similar to Oregon, there's still work underway, with respect to the private plan process, what that looks like, we're likely going to have a rate filing in Colorado. So that will take some time to figure out how that works and get everything in order before private plans can be applied for. We know that in Colorado, there's going to be a website, it's called My Family plus. And that's going to be similar to the registration that we've that we will see in Oregon, that we saw in Connecticut where employers have to go on and register their business. And this holds true for both public employers using the state plan and those that plan to apply for a private plan. So the register their business, there is a soft launch of my family plus coming likely in fourth quarter of this year. And then all employers will need to have registered by q1 2023. So, you know, think about the end of first quarter next year that registration needs to be complete. So that's one of the things that we do know, we also know that all employers are going to need to remit contributions starting in January. So this is where Colorado has taken a bit of a different approach than some of the prior states that we've seen that have implemented these types of programs. So employers will start contributing in January, and then those that choose to pursue a private plan may be eligible for a refund of their 2023 contributions. So what they'll need to do is apply for a private plan by October 31. Next year, so October 31 2023. And then the effective date of their private plan needs to be January 1 of 2024. And that will make them eligible for the refund of their 2023 premiums. employers that have a private plan and effective date after January 1 2024, won't be eligible for that refund. So that's what we do know, what we don't know is much else about the private plan application process just yet. We do have the draft rules. So there's some insight into where the state may be going. But there's a comment period. And then we'll we'll expect to see those final rules, likely in November of this year. And that's where we'll learn a lot more about what that application process looks like.

Karen Batson: 15:28

So if an employer is thinking about that they want to do the private plan process, is there any steps that they can take right now with Colorado?

Kristin Seidman: 15:37

I don't know that there's a lot that they can take right now, I think all employers have some things that they need to be working on this year. So that's, regardless of whether they're going to be in a state plan or pursue a private plan. And that's just to prepare for registration on my family plus, because they'll need to do that, that's likely where they're going to apply for a private plan. So making sure that that registration is complete, once the website is available, will be key. And then they'll also need to prepare to collect contributions in January. So that may mean, you know, working with payroll or hrs vendors, or some employee communications about any forthcoming payroll deductions that they can expect. And then I think the the other thing that all employers should keep in mind is that April 30, is the first date where premium is due to the family division.

Karen Batson: 16:27

So what kind of questions are you saying about Colorado and the private plan process?

Kristin Seidman: 16:32

All fo them? You know, as I mentioned, there's just a lot of there's a lot of questions that come with the launch of these programs. And I think there's a desire to have all of the information right away and paid family medical leave just works a little bit differently than many of our other insured type coverages that are out there, because states have to go through rulemaking, and then each state is a little bit different. And that, you know, their employee population may have different needs in other states, and we see iterations from former programs, and, you know, some trends emerge. So, you know, I think employers want to know, when they can apply how they can apply what Lincoln's gonna offer, in terms of, you know, what our process will look like. And a lot of that is just kind of TBD.

Karen Batson: 17:22

Right. Well, my last question for you, you know, we we talk about these programs, because they're launching, and we really focus on the plan build, and what do we know? And when you know, those first steps for that launch date? Of course, these decisions strategically go beyond that. What should we be thinking about beyond 23, 24? With these programs and decisions that are being made?

Kristin Seidman: 17:45

Karen before we answer that question, yeah, I just if you don't mind, I just like to double back on something that I thought about for Oregon, based on what Kristin was mentioning, related to Colorado for it. So we see these programs iterate, kind of from one design to the next as they're launching. And so Oregon has somewhat of a similar approach as Colorado and being more conservative with the contribution expectations for employers that are kind of in this limbo period before their equivalent plan is fully approved. And so there's an expectation that as of January 1 of next year, employers begin taking contributions and holding those contributions in trust for those that go through the declaration of intent process. And if an employer decides that they don't want to take contributions starting in January, or maybe they you know, their longer term strategy is to cover the employee costs anyway, they can certainly cover the employees cost for those contributions and put them in trust, instead of withholding them from employees. It's almost like you're setting aside the equivalent of what you would have withheld from employees with company dollars. And when we say trust, it's not quite a formal trust that you would see under other programs. It's a segregated account. That's not having any commingling of those contributions with other company assets. So it has to be solely designated for the Oregon PFML contributions. Now, for employers that go through the equivalent plan application process, they complete that timely, those contributions don't have to be submitted to the state. And so that's maybe that's the distinction with Colorado, but there's still that expectation that they're starting as a one one. And really, it's the state wanted to intend or to ensure that as employers were proceeding with their ultimate decisions that if someone needed to come back into the state plan that though that money was readily available, but important, keep that in mind as well because there is going to be that additional action on the employer's part starting in January to either take the contributions and hold them, or to set aside the equivalent of the contributions and again, hold them in that trust that I described. So I wanted to make sure I call that out. That was an important consideration for Oregon. I didn't want to miss

Karen Batson: 20:15

Absolutely. Any other considerations for either state that we didn't cover that you think our listeners would benefit from?

Marissa Mayfield: 20:21

Not right now. But we'll have more.

Kristin Seidman: 20:24

Give us a day or two.

Karen Batson: 20:27

Back to my question on future state. So beyond the launch 2023 or 2024, as employers are making decisions about private plans strategically, how should they be looking at that in the future, or what they will be responsible for?

Kristin Seidman: 20:41

So I think strategically we've talked a little bit about it, they'll want to think about how they approach absence as a whole, you know, if it makes sense to look for a private plan. But then kind of from a tactical perspective, I think there are employer obligations that they need to be aware of. And these look a little bit different from state to state, but think there's a renewal period in most states. So employers need to prepare for, you know, if they get that initial exemption from the state program, when do they have to renew and what does that look like? And a lot of that guidance for these states will likely be come later. But we're starting to see that in some of the programs that have already launched. And then I think they need to think about, you know, posting requirements or their poster notices that they need to hang or put on their internet. And you know, what sort of reporting requirements they may have to the state, because commonly, the state will look for information about contributions or payroll, and then claim type information. So even with a private plan, there's still some employer responsibilities that they need to prepare for. And I would just add that we're seeing a lot of the things that Kristin mentioned, are already contemplated in the Colorado and Oregon programs. And so just just a couple of quick examples for Oregon, the employer has to maintain their equivalent plan for at least one year. So that's one of the key compliance requirements, those that don't be subject to retro contributions and penalties. There's also a renewal expectation that they for the first three years of their equivalent plan, renew it annually. And so that means the state's going to want to do a review of the plan, there's a potential depending on if there's changes to the plan made, that there might be a fee, that would apply. And then there's also the expectation around reporting of wages and benefit information. So those are very much common place. And I will just share that we will have the more detailed aspects of each of those programs to ensure that our clients remain compliant, as we're continuing to build out all of our resource material throughout the launch over the next few months.

Karen Batson: 22:51

Well, thank you ladies and any parting words on these states. As we end our conversation,

Marissa Mayfield: 22:56

My parting word is we're very much focused on ensuring that we've got, you know, all of our bases covered for these two programs, while we're also keeping a pulse of what's happening with other programs. So stay tuned for more information on Delaware and Maryland. And any other program that ends up emerging over the coming months. So just know that we're always kind of heads down, but then also looking forward at the same time to make sure that we keep that information available to everybody.

Karen Batson: 23:30

Couldn't have ended that conversation any better. That's perfectly said Marissa.

Kristin Seidman: 23:35

I agree. That was great.

Karen Batson: 23:36

Thank you both for joining us today.

Kristin Seidman: 23:38

Thanks, Karen.

Marissa Mayfield: 23:39

Thank you.

Karen Batson: 23:39

Thank you, everyone for listening today. And a big thank you to our guests. We hope you enjoyed today's episode and you'll tell us by reaching out to your Lincoln benefits professional sharing an episode or following us on Apple Spotify or wherever you get your podcasts.

Disclosures: 23:54

The information contained in this podcast is for general use and is not a substitute for the advice of an attorney or your human resource professional. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations.