State vs. private plans: Conversations and considerations

How do companies decide whether to go with their state PFML plan or choose a private option instead? In this episode of Lincoln Absence Advisor, we talk with two Lincoln national account executives who offer their years of experience guiding clients through this process. They discuss the many factors companies need to consider and how Lincoln can help them arrive at the decision that’s right for their situation. There’s a lot to weigh: employee experience, company demographics, cost, how many states employees work in, coordination with other programs, timelines, and available resources for implementation. It’s a unique decision for each company, but third party vendors like Lincoln can be a valuable part of the process and provide needed facts and feedback. 
 
 Sources mentioned in this episode: Lincoln Absence Advisor Compliance Reports

© 2022 Lincoln National Corporation. All rights reserved.  LCN-4503697-031022

Transcript

Karen Batson: 0:00

Hi everyone, this is Karen Batson Marketing Manager at Lincoln Financial Group. In today's episode, I'm joined by two of Lincoln's National Account Executives, Patrick, Baltmiskis and Mandy Arroyo. These two bring a lot of experience when it comes to conversations with employers about paid family and medical leave, or PFML as we refer to it in the conversation. In particular, we talk about what kind of questions they receive, and what is important in the conversation regarding state plan versus private plan. How does an employer make that decision? How do they weigh all the options and what's right for them? So they give us a little bit of insights into themes that they hear about information that employers should be asking for or seeking, and really some best practices when it comes to making that decision. I hope you find this episode useful. Enjoy. Hi, Mandy and Patrick, this is your first time on the podcast. So welcome.

Mandy Arroyo: 1:00

Hi, Karen. Thanks for having us.

Patrick Baltmiskis: 1:02

Yeah, Hi Karen! Appreciate the opportunity to talk to you today.

Karen Batson: 1:05

I think our listeners are gonna love it. So let's just start with a really easy question. Let's do introductions. So if you don't mind telling us what you do and how you're connected to PFML Private plans.

Patrick Baltmiskis: 1:17

Sure. So again, my name is Patrick Baltmiskis. I'm a national account executive with Lincoln Financial Group, I have 14 years experience with the company, all in group benefits and protection. My role is a I'm overall responsible for relationship management with our national size clients. So in the 5000 plus employees face, and when you kind of break it down, we're responsible for assisting our customers with best practices, program recommendations, industry expertise, and really being an extension of our partners at Lincoln and absence management disability and life. And I think I made that difficult for Mandy, because I want first.

Karen Batson: 2:01

How about you, Mandy,

Mandy Arroyo: 2:03

That's okay. No, I'm also a national account executive similar role to Patrick. I've been with the organization for 16 years, but really did start out as a subject matter expert working in the claims operations and moved that expertise into my current role in account service. And, and Patrick and I have worked together over the years on some projects together. And because most of my clients, even though they're national clients, they are mostly focused in the northeast area, I do have a lot of expertise in setting up private plans or helping employer partners select whether or not they're going to take a private plan versus a state plan. So that's been part of my every day for many, many years.

Karen Batson: 2:53

I'm excited to dive into some questions you guys might hear and how kind of those decisions come into play. First question for you. What is the most common discussion you have when it comes to state plans versus private plans?

Patrick Baltmiskis: 3:05

So I think it really boils down to two major things for me, employee experience, our customers, that's always paramount. That's always the number one thing how does it impact them in terms of if they have one-call integrated experience, or they're required to provide information to both Lincoln as the vendor partner as well as to the state. And then secondly, as you can imagine, cost is always a driver, and Lincoln specifically underwrites each of these programs based on employee demographics. So it can be advantageous or cost prohibitive, depending on the demographics and the program and what's included. But for me, those are probably the two most common questions, discussions about whether or not and employers interested in taking the next step. So even even discussing or getting a proposal on a state disability or paid leave plan.

Mandy Arroyo: 4:09

And I would also add to those two important aspects of what you have to consider with private plan or state plan options is we always start with a leading question or asking ourselves how many employees do you have working in that particular state? Because that is a big driver to on how the discussion goes, if they only have one employee are no employees. That's a really easy discussion. versus you know, if they have a lot of exposure, a lot of employees in that particular state or area.

Karen Batson: 4:40

Do you feel like you're bringing things up that the employer may not be considering if they're just honing in on the finance component or the employee experience or questions like you just brought up about population within the state common that you're bringing these things to the table of let's also consider this.

Mandy Arroyo: 4:56

Yeah, Karen. What I do a lot of times with with my clients is in advance As soon as I know that there is a new program that's going to be offered by a particular state, territory or district, I start that planning stages very early on looking at if they have exposure, and then bringing up the things like you said that maybe they're not thinking about, for example, the states may require notification in advance to employees. So we're here to really help educate them on what needs to happen, no matter what you choose date plan or private plan, you know, if there was employee contributions, when do those employee contributions start? How are they working with their payroll department to make sure that those notifications go out so that employees are aware that, you know, they're gonna see at contribution withheld from their their paychecks. So there's a lot of planning that goes into play within their organization, anytime there's a change with one of these new state programs.

Karen Batson: 5:55

Now, states can get announced really early on, right, people are working right now on Oregon and Colorado, you know, in for a couple years. So that planning phase, and conversations can span a couple of years, I assume?

Patrick Baltmiskis: 6:06

Yeah, I mean, we have, we have a great team of experts, and product and legal that work with the state help us understand the guidance. And, and we really use their direction. And as you said, Karen, it's a lot about what's available. A lot of times, there's an announcement of legislation is passed. And then there's time in between and incremental changes and guidance about what the plan will actually be the benefits, the eligibility, and how it will actually function. So similar to Mandy, I think we want to take and we do try and take a proactive approach, and giving those updates as they come, Lincoln does a great job with the Absence Advisor and all the different resources we have available. But our responsibility is bringing those things to the forefront with our customer partners and keeping them in the loop as things come out, change and decisions are made.

Mandy Arroyo: 7:03

Yeah, one way we really track that is we periodically check in with our clients. And at least for myself, I have project plans, and I will have something like Colorado or Oregon on my project plan for two years, maybe it's in a monitoring status, and I highlight it differently. So they know it's there. And maybe we don't have to discuss it right away. But I put a target date on there, so that we're sure to bring it up. And and like Patrick said, provide any updates, you know, if the dates are changing, or the date employee contributions begin is changing, then all of that gets documented within a project plan. And we're all sort of on the same timeline. So it's not a surprise.

Karen Batson: 7:46

We know the leave landscape can be pretty complex with those changes over that period of time. So how complex to the conversations get that you have? Or how confusing can they be in regards to what information you need to relay?

Patrick Baltmiskis: 8:00

I think it depends on the customer. Mandy made a great point about exposure, I find that customers that have private plans for existing state benefits generally are more in tune to those conversations, because they're aware of the implications of a private plan versus the state plan. You know, it really just kind of depends is how much of a deep dive they want to do as early as we have the information. You know, it gets all the way down into, you know, what are the requirements for an approval, there's been varying processes with the states, including most most recently, Connecticut had a 50% plus one voting requirement. And all those things are important to the decision customers know their employees, how they're going to get responsiveness, you know, that the reaction to any requirements on the employee. And you know, most importantly, in many cases, contributions that may be required, whether those employer paid employer employee split, or completely covered by the employee. And that all kind of goes down into a deeper dive about financials and the implications of being in a private plan with a third party vendor.

Karen Batson: 9:16

If they have a private plan already, does it automatically mean they're going to go to a private plan for another state?

Mandy Arroyo: 9:21

It doesn't know Karen. So they'll make that decision. Because all these states are a little bit different either how the contributions work, and again, how many employees they have working in that state could be a consideration. So in the northeast, we're all really familiar people in New York, New Jersey, they have private plans, they've had them for years and decades, but they've made different decisions based on all of those considerations Patrick was talking about for Massachusetts and Connecticut. So it's almost a state by state consideration and decision to make and we're really here to help them support that. Something else you talked about, like, depending on how that conversation goes, we have customers who work out of only one particular state, for example. So let's say they're only in Maryland, and all their employees work in Maryland. But now, you know, when DC came, and now they have employees working in DC, they had to really learn even what that meant to even have a district PFML benefit like that. And how did that impact them and coordinate with their existing benefits that doesn't have a private plan offering. So that's an educational piece where you don't even have the option to do a private plan. Additionally, something that's really coming to light now is with so many remote workers, employers are making decisions to permanently move employees work states to where they're working remotely. And so for that example, in the state of Maryland, they didn't have that exposure to statutory benefits or the state pay leave programs. But now they're letting employees work remotely. And now all of a sudden, they didn't even know that they're, you know, they have someone working in one of these states, and they have exposure. And it starts with basic education, what is a private plan? What is a state plan, so we're really spending some time on the education piece, just explaining what it is not just how to go about setting it up. It's just a foreign concept to them in some cases.

Patrick Baltmiskis: 11:25

Yeah. And that's, that's been something that's been on the landscape, even pre pandemic, with remote working and the capabilities and the being able to still interact with your employees and have a great team environment. Historically, at least in my experience, many employees were unable to identify through their HRIS system, their actual employees, physical work location, if they worked home, they would mark them as remote and either tie them to a corporate office, or perhaps where they reported up through. So that's been a change and the importance of being able to identify where they work driven by the state plans.

Karen Batson: 12:07

Does that change the conversation at all? Because I'm guessing potentially, you're talking about multiple states at once were some other conversations, it may just be a state's about to launch, let's talk about the impact of this one state.

Mandy Arroyo: 12:20

Yeah, it is a different conversation, I worked with a hospital system where they started thinking about this, they hadn't yet made the change to allow employees to officially work from a remote work location. And so they proactively had a conversation with me, including their legal counsel to really look at where they would set parameters of where employees were going to be allowed to work from and where they weren't going to be allowed to work from. So they looked at it not just from a disability perspective, or PFML perspective, but also there are other benefits that are involved in expanding your work location map. For example, workers compensation benefits are based on jurisdiction. And there's a big difference between if you're have workers compensation exposure, and Pennsylvania versus Ohio even. So those are things that with some organizations they're really proactive about, and they're trying to sort of limit the risk associated with how they roll out these remote work programs.

Karen Batson: 13:27

Now, you mentioned earlier, you know, a key element of the questions you get around finances, how can an employer assess the financial impacts of a state plan versus a private plan?

Patrick Baltmiskis: 13:39

So there's, there's several moving pieces when it comes to that? I think, first and foremost, you're looking at what the state rate is, versus what potentially a private plan can be, in my personal experience, that can vary greatly. It depends on what the benefits are. If there's a paid family leave tied, and then really what those employers specific demographics are a secondary piece of that is contributions to the state with a private plan. For example, I've had a customer that went live in Massachusetts and Connecticut with significant populations who decided to go with a private plan with Lincoln fully insured. And in those scenarios, there's no requirement to start contributing to the state 12 months, nine months, six months prior to the actual go live date, premiums aren't due to a third party vendor like Lincoln until one 1/1/22, for example, with Connecticut so there's also that piece of the discussion and a lot of that goes into our initial discussions with employers, depending on the timing of the conversation, and Mandy made a great point about being proactive because if we can start to present those savings early on, there may be an instance where Lincoln's rate may be a little bit higher, but it's still provide long term savings to an employer. I've seen based on the time of year in which quarter of an employer makes a decision, over a million dollars worth of savings not contributing to the state in the 12 months leading up to the go live date. There's also the ASO component, there are administrative services only so employer funded, but Lincoln administered plans. And that's another financial consideration. One of the things that I like to talk about is known cost versus unknown cost, right? If we're, if we're risk assessing it and providing a premium for a fully insured plan that allows for employer budgeting for their benefits, and what that will look like, at least for a 12 month time period where there's there's a lot more financial, I don't know if I'd say risk, I guess risk is true. But there's an opportunity for either a much greater or lower cost to the program, if they're paying on a per claim basis, as opposed to, you know, providing a standard premium by volume calculation that we would do for the fully insured plans.

Karen Batson: 16:12

We talked about in the beginning the importance of employee experience, then we talked about the financial impact those being kind of two major decisions, how are those connected? Right? So I would assume, you know, something might come across more expensive, but the benefit of ease to the employee, can that outweigh the financial part of the conversation?

Mandy Arroyo: 16:33

Yeah, I think that that experience versus cost, sort of they blend together. And the the best way to position that to an employer that we work with is to really map it out for them. Let's go through the experience, if you stick with a state plan, and we can do that we can coordinate benefits, here's how it's going to look. And overall, this is the cost you and this is the cost your employees, right. And then the second experience is if you have us manage the private plan for you, let's map out that experience. They have one place to go streamlined experience, ease of administration, we still coordinate all the benefits together, but it's it's a single carrier, managing all aspects of that. And so just comparing that because obviously, you have to pay a premium or an additional fee to that carrier, like Lincoln Financial Group to get that experience. That's the coordinated experience. But it's I think, Patrick, you've said before, you know, One Call Does it ALL, they only have to go to one place to request that leave of absence.

Patrick Baltmiskis: 17:41

Yeah. And I think there's one important thing that we always talk about, too, is I think we put focus on the paid aspects of the plan. But there's also the differentiation of the job protected leaves that may come with state or municipalities. And how all those things coordinate together as well.

Karen Batson: 18:00

Absolutely. Now, what happens when an employer starts with a state plan and later wants to move to a private plan. Do the questions change in regards to the conversation that you have?

Mandy Arroyo: 18:10

I think at that point, they're more familiar with the options. But sometimes with some of our national based customers, when these new programs come out, sometimes they're like, You know what we're going to hold off, we're going to let the state program go, maybe look at it for a year or two. And then we're going to reconsider a private plan just based on that enhanced experience with a single carrier. So we've definitely had conversations with some of my clients about that. And, and their their interest really lies and just learning how the state program works. And sometimes they're good with just sticking with the state and they don't move to you know, they've learned from that experience. And other times they're eager to move it to a private plan. But it's not I mean, you still have to go through the same steps. And you have to be cognizant of how the state specifies how you can move from a state plan to a private plan, because there's sometimes there's some regulations around that. But the same steps are true. We have to put a project plan together, there are detailed steps that we have to complete to get that private plan up and running. But I think they have a lot more familiarity with it if they choose to do that at a later date.

Patrick Baltmiskis: 19:19

Yeah, I agree with Mandy, the only thing I would add is, a lot of times it becomes a timing and bandwidth consideration depending on you know, when the state plans are rolled out, and internal projects resources and things to get it private plans stood up can impact employers inability to go live for when the program goes live as opposed to saying we want to further discuss this. We understand how the program works, but we need more time to be able to implement it. There's considerations for that as well. You know, there's a million things going on for our customers at any given time. I'm and you know that those conversations will circle back depending on what their priorities are for the year notification from the state, as well as other considerations for actually getting it implemented. But getting it implemented in a way where it's advantageous for all the parties involved.

Mandy Arroyo: 20:18

I also think sometimes, you know, well, I know that there could be like merger and acquisition scenarios, where all of a sudden, you didn't have any exposure in one of these states, and boom, now you have 1000s of employees in a particular work state. And now you've got to quickly make some decisions. But again, it's all about timing and resources. And they may very much want to move to a private plan, because now they've got 2000 employees working in Connecticut, for example. But again, sometimes you have to get the time there, there's time that it takes to get that set up and put into place.

Karen Batson: 20:53

It's amazing how many layers there are to this. So the theme I'm picking up is have conversations, it's like the most important thing for you to do with the partners that you have, whether it's Lincoln or another carrier you're partnering with, but talk through it, because there's just so much that goes into that decision.

Mandy Arroyo: 21:10

Absolutely.

Patrick Baltmiskis: 21:11

Yeah, I think it's a it's a lot of learnings. You know, from experience, it's it's a similar process to implementing any program with Lincoln. Yeah, where are the expectations? What are the timelines that are required? How will the program function? What does that mean for employees, but for me, what I found most important if you can get through the cost barrier, if it is one is communication and employee experience, it always circles back to how easy it is for employees, you know, whether it be they're going through a challenging time, if they're having an absence or a happy time, you know, it could be either one employees have a lot on their plate and found employers always want to improve that experience, or make it as easy as possible. And that's, you know, one of the things that is important in the conversation, kind of thinking about how it all integrates together, you know, you have people that are out of work for a myriad of reasons, their pay is one of the most important things, how that functions, how quickly it happens. And, you know, those are all different pieces to the puzzle, depending on the there's the complexity of how the short term disability plan is set up if they have one, and how those two interact. So, you know, lots of different moving pieces and layers to your point. And I think the employers, what they're looking at, and what's important to them drives the conversation as to what really makes sense for them in their decision.

Mandy Arroyo: 23:00

Well, I would say start that engagement with your account management team that services, your accounts across all of your, your benefits, not just disability and paid leaves. I think the theme we Patrick and I, you know, think that's what's successful with us is being proactive and keeping those lines of communication open, and really tracking what decisions need to be made. And when and if you need to making sure that you're you're bringing the right parties together. So sometimes procurements involved and like I said, legal and and so there's a lot of people who have stake in this game that want to make an informed decision. So we're here to educate them, and help them through that process. So that it becomes an easy decision to make once you have all the facts.

Patrick Baltmiskis: 23:49

Yeah, Mandy hit it right on. I think I would say in addition, as use your experts, Mandy mentioned some of your internal partners, but that's what Lincoln's here for as a third party vendor and really an extension of our customers ask the questions, get the guidance, let our let our product and legal team and your account service team help guide you through the implications and really kind of what what the important pieces are in making your decision.

Karen Batson: 24:19

Well, thank you both. I appreciate your time and helping us get some first episodes in for season three,

Mandy Arroyo: 24:25

Thanks Karen

Patrick Baltmiskis: 24:25

Thanks Karen. Appreciate the opportunity.

Karen Batson: 24:27

Thank you everyone for listening in today. And of course a special thank you to our guests for the conversation. We really hope you liked today's episode and that you'll tell us by rating us sharing the episode or following Lincoln Absence Advisor on Apple Spotify or wherever you get your podcasts.

Disclosures: 24:46

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 received. sponsible for their own financial and contractual obligations.