What's next for state family and medical leave? Part 2

In this episode of Lincoln Absence Advisor, we continue our conversation on the newest paid family and medical leave programs. We discuss what we know about Maryland and Delaware, as well as alternative solutions to paid family and medical leave programs in New Hampshire and Virginia. Find out about both state and private plans, differences between each state’s approach, timelines, and more. Tune in to keep up with the latest trends and plan essential next steps for your company.  

Resources:

• April Compliance report that offers an overview of Maryland
• May Compliance report that offers an overview of Delaware
• Lincoln Absence Advisor hub

© 2022 Lincoln National Corporation. All rights reserved.  LCN-4795007-061722

Transcript

Karen Batson: 0:00

Hi everyone, this is Karen Batson Marketing Manager at Lincoln Financial Group. In today's episode, we continue our conversation on paid family and medical leave programs. In particular, we'll talk about Maryland and Delaware. We'll talk a little bit about New Hampshire and Virginia. And then we'll talk about trends and impacts. But in particular, what we need to be paying attention to as this leave landscape grows, I'm joined by members from our product team and our legal team so that we can provide you as much information as we know now. I hope you enjoy today's episode. All right, let's jump to two new states that we know even less about, probably, Maryland and Delaware. So in last couple months, these programs were announced. What do we know?

Trish Zuniga: 0:43

So Karen, this just happened last month?

Karen Batson: 0:45

Good news we gotta share!

Trish Zuniga: 0:50

No, absolutely. So I'll start off with Delaware. So this just happened on on May 10, the Delaware governor signed what's called the Healthy Delaware Families Act. And it provides, you know, wage replacement benefits called paid family and medical leave within the Delaware Department of Labor. But it's so new, there's no section on it on the website just yet. I don't think they have a PFML directory just yet. But they'll get it set up. We have a pretty long runway for it. Because contributions are set to begin January 1, 2025. And benefits begin January 1, 2026. And yes, there is going to be a private plan option, which can be either self insured or fully insured. But please give us some time. Before you ask about our product offerings we'll need some time to look it over.

Kristin Seidman: 1:56

Can I take from a Maryland perspective because Marissa already mentioned Oregon start date is September 3, which is one of the the only program that didn't have a January start date. And the thing that keeps jumping into my mind for Maryland is the contributions start in October of next year, instead of January. So we have another state kind of playing with alternate dates. But their program is live January 1, 2025. So basically the start of every year, we're going to have a new program for the foreseeable future.

Sarah Montgomery: 2:29

Yeah, Maryland tracks very similar to Delaware and other programs. It's interesting about Maryland, I don't know that anybody in Maryland actually thought the program was going to pass since it was a sleepy little bill that all of a sudden gained a lot of momentum at the end of this session, and actually passed and had a lot of changes and amendments to it at the last minute. So it was ultimately passed in April. But you know, the governor did veto it and the legislature overrode the veto. So this was not an easy path to passage of this bill by any means. But everybody recognizes since it was there was so much work going on at the last minute and changes being made kind of on the fly as they were working through the language that there will be a bill to make adjustments to it. But you know, like most states, you know, Kristin went through and mentioned the contribution dates and the benefit commencement date. You know, there's still a lot that's unknown, the rates are unknown. The good news is that there is, as part of the legislation, there is actual actuarial study that's going to be done to help come up with the rate. So, which is good news that it will be based on, you know, experience in other states, so but we won't be seeing those rates for quite some time. And it's you know, like, and then again, little things that are different. Maryland has the the rate cycle is two years instead of annually that we see in some other states, Maryland also similar to other states, there's a private plan, opt out and benefits will be on a self insured or fully insured basis for equivalent plans. Covered employees have to have had worked for their employer for 680 hours over the last 12 months before leave is needed. So you know, based on a 40 hour workweek employees will be eligible and about 17 weeks after about 17 weeks of work. It's a 12 week benefit that if an employee one thing that is again different in all these states have these little permutations. So the typical bucket of leave is 12 weeks. But there is the recognition that if somebody needed bonding leave in a year and they needed medical leave, there is a chance that you can collect, you would get an additional 12 weeks of leave. But again, just under that one circumstances if you needed bonding leave and medical leave in the same year. similar reasons as what we're seeing in other states care for family member child bonding, qualified exigency for military service, and own medical and Maryland is following other states too and doing a sliding scale so lower income workers will receive 90% benefit replacement, wage replacement sorry, where as higher wage employees will go down on a sliding scale with the benefit Max, the current cap is$1,000 a week, which will be adjusted in 2025. For the benefit year 2026. But when you're kind of looking for planning purposes, for people, it's $1,000 Max benefit. But there's a long way to go on this we're doing, you know, the carrier groups are already reaching out, and we are doing what we can to help look at the legislation and inform whatever fix legislation will come up in the next session, and then do our part to help take it from there and support the state as they build the equivalent plan process.

Karen Batson: 5:32

In what we know now does anything stand out, and you mentioned one, but for either program stand out as unique.

Trish Zuniga: 5:40

So for Delaware, one thing that we haven't seen before in other state programs is that the availability of qualifying leave reasons for paid leave is based on the employer size. So if you're an employer with less than 10 employees, so you're not required to provide PFML coverage, employers with 10 to 24 employees during the previous 12 months, you only have to comply with the parental leave provisions. If you have 25 or more employees, you have to provide parental family caregiving and medical leave. And so what that means is that the contributions are also parceled out. So the rates are separate for parental medical leave and family caregiving leave. And then just to close out the loop. So I've mentioned if you have employers with less than 10 employees, then you're not required to comply with the PFML law, and also any business that is closed in its entirety for 30 consecutive days or more, more per year. So that means all of those seasonal businesses on, you know the seaside towns of Delaware are excluded from having to provide PFML coverage. That's certainly new to me. And it raises some questions on what happens when you cross that threshold, you know, if you're an employer who had nine employees, and then you suddenly had 10. And then the next threshold is if you've had 24, and then reach 25. Like what happens? And when do your employees get to take their PFML Leave? We don't know yet. But it's going to be a unique challenge that the state is going to have to address either through additional legislation or further rulemaking.

Sarah Montgomery: 7:35

The one difference with Maryland is that the additional 12 weeks of leave so that there is there is that potential for uncertain scenarios, an additional 12 week entitlement, which is a little bit different than something the other states that we've seen in the past.

Karen Batson: 7:49

So for our listeners, you know, we've done two great write ups on the states when they went live in our compliance report. So I'll link to those previous months in our show description. So you can read more about the states. So last question on these states. What do we expect to happen next? Same question. As with Colorado and Oregon, what's going to happen,

Sarah Montgomery: 8:09

Fix bills next year,

Trish Zuniga: 8:10

Answer questions about how the benefits are going to be administered definitely, and in the law for Delaware. So it requires the Department of Labor to conduct rulemaking for filing claims and adopt all sorts of regulations to implement the PFML law. Now, I read through the fiscal note that was supporting documentation for the PFML law. And it projects the need for staffing over a two year period for the Department of Labor. So that's that's where we first have to look at the Department of Labor staffing up and hiring PFML staff to start doing all of these things that they're required to do by law.

Marissa Mayfield: 8:56

One thing I would add, and this is a little bit further out, but I'm always thinking about trends. And so with Maryland and Delaware kind of coming at the same time from a passage standpoint, and that really being in that Mid Atlantic area of the country. I'll be very interested to see how we see more expansion from a PFML perspective in other states. So Pennsylvania is now almost surrounded by other state, other states that offer these types of programs. And I would be very interested to see how that presence starts to put pressure on other states to look at adopting programs like this for attraction into the state from a workforce standpoint, and then really just to kind of keep on pace with what's happening in their region. And so in in even starting to move down south. As we think about the East Coast. There's no paid family and medical leave programs in the southern region. And so I'd be interested to see how this movement is starting to move both from an North perspective to kind of round out the Northeast states and then Pennsylvania and then starting to move southward as well.

Karen Batson: 10:07

Well, let's move on to New Hampshire and Virginia, let's level set what they're doing and why it's different, who wants to kick us off with this conversation.

Sarah Montgomery: 10:17

So I can take a shot at giving you from my perspective, what makes them different, and then also everybody, please feel free to contribute since I know we've been in different conversations about this. In Virginia, the state took the approach that they are going to not mandate a program, but they are going to do everything they can to encourage the development of a private market for paid family medical leave insurance. So a group of legislators got together and drafted legislation to change the group insurance statute in Virginia that allows for a new category of insurance to be known as paid family leave insurance that can be an it's now up to carriers to develop products around these that could be sold either as a rider to a disability policy as a standalone policy on its own. So again, it's the encouragement of a voluntary market employer based, which is different, definitely different than what we've seen before. And then, as Marissa was talking about, like when you're seeing blocks of states that are trying to kind of experiment and be creative about how to offer leave, New Hampshire and Vermont in the past, tried to get together to create a pool of state employees that they could have used as the basis to underwrite and offer paid family and medical leave to state employees, and then open up that pool to private employers who wanted to join and make the benefits available to their employees as well. Again, it's a couple of years ago, they had it as a joint effort, they states disconnected their efforts. So New Hampshire ended up passing legislation that will create what's known as the Granite State paid family medical leave plan that will mandate paid family medical leave benefits to be made available to state employees. And again, as I mentioned, the carrier that selected to administer the state plan, we'll also be able to offer plans to private employers if they're interested. So they could get on a voluntary basis offer benefits paid family medical benefits to their employees. And then there's also that same carrier would also be able to individuals could opt into that plan as well. So it's just a different approach to create a voluntary market to try to get to the same place without a mandate.

Kristin Seidman: 12:29

I think what what they've done that similar to the other states is they've recognized a need for employees to have time to take care of some of those, those things that happened outside of work, they've just taken a very different approach in order to try and address that. So it'll be interesting to see how this approach works compared to some of the traditional PFML programs that we've we have in place already.

Marissa Mayfield: 12:52

I'd be interested to see if this creates a new wave of activity at the state level, in particular, in states like mine in Georgia, where there hasn't been a whole lot of movement in, you know, wanting to introduce paid programs that really require a lot of funding from a state perspective. And so is this the entree into paid family and medical leave offerings, you know, for states that aren't quite ready, or maybe even willing to a degree to make that major commitment and investment. And so this can certainly be, I guess, depending on success and how it, it fares a way that some other states start to at least dip their toe in, and then we'll start to see if that has a broader impact on maybe the next move being mandatory programs.

Karen Batson: 13:46

So what do we know about these programs or other? What should we be paying attention to given how different they are?

Trish Zuniga: 13:53

So I would say that everything is fairly open ended, except for New Hampshire's the mandatory piece of their paid family leave plan for state employees, which is supposed to start in January 1, 2023.

Sarah Montgomery: 14:11

Yeah, Karen with that there's not a lot of detail around what's going to happen. So they state issued an RFP to select a carrier to administer this plan for the state employees. And we're expecting to hear which carrier was awarded that contract in the next month or so. And they'll build out the program from there as far as kind of that carrier will set the stage. But New Hampshire's completely open to having other carriers office offer products they want to they want to do whatever it takes to build a, you know, a robust offering that would be attractive to private employers to offer this benefit. Since they do recognize the need for leave. It's just as always had to get there since it's an expensive program, but it's a great benefit that people definitely need.

Karen Batson: 14:56

Well, let me go into some of my last questions here. Overall, talking about all these states? What should employers be asking today about all or any of these programs?

Marissa Mayfield: 15:08

For employers that have employees working in any state that mandates paid leave, whether that be statutory disability paid family leave, I think it's really just to remain vigilant continue to watch these programs, we are starting to see more trends in state programs, establishing a plan and then tinkering with it, you know, whether that be making changes to the regulations along the way, we see that pretty commonly with with Washington, or for programs starting to introduce new components are starting to, whether they introduce it or start to consider new aspects of their program as well. And so what I think we'll start to see even more is an evolution of programs. they're not going to just sit on the shelf, once they're created, and they're just going to be set in stone. I think the the program that really is set in stone right now is New York, DBL. That program has decades, you know, so for some of us, it predates, you know, us period on this call as far as how long it's been around. But I don't think that that's the way that we're going to see other programs, to me, that becomes more of the exception than the rule, I think the rule is going to be dynamic programs that evolve over time to continue to meet the needs of the workforce, wherever that state has established that plan. And so I think it's just continuing to anticipate that so it's not so much of a surprise for employers that just to expect that there is going to be a degree of change that continues to occur, even if a program is now in place than to not think that it's going to

Sarah Montgomery: 16:55

Now, that's a great point that it is you stay the same. employers can't it they're not set it and forget it. It's it really is they are changing constantly. And even in the PFL world, New York left their program alone, but they were adding a new definition sibling will be added as a definition of covered family member next year. So it's, you really can't you have to keep up with all of them every year and make sure you're working with your carrier or employment counsel to make sure you're really staying on top of every little nuance since one thing we haven't seen like we you can't spot a trend about what's being changed, it's just you have to know they can and will change basically, every year, features of the program could change.

Kristin Seidman: 17:36

The other thing that I think is important is to look at the other programs that exist. So short term disability company sponsored leave on paid leave, and make sure that you have an understanding of how the new programs will interact with those.

Sarah Montgomery: 17:49

Yeah, because we always forget the poor employee who's trying to not that we forget, we think about them all the time at Lincoln I will say in our shameless plug is that we are talking to them and trying to help them make sense of their benefits. But for an employer who's starting up in Oregon, they don't have employees anyplace else, they may not have a very sophisticated benefits offering their employees have a lot of new information coming at them. And the employer has a lot of new information coming at them. So give yourself as much time as you can, both for employer employees to educate yourself, Casey and Trish and mentioned you know, websites to go to there's webinars all the time that are available, you really do need to start early, making sense and asking questions. The department's they're very helpful, and they want these programs to be successful, but they're not easy to understand.

Karen Batson: 18:40

Kind of leading off of all of your answers are launched programs programs already live, making changes with so many new programs being developed and seeing what they're doing?

Trish Zuniga: 18:52

That could take a whole episode. But briefly, I'll just say that just because the program is live doesn't mean that the state has stopped regulatory activity. So let's take Washington, for example. They passed a new law that made changes to the PFML program. But they also included these plans that kind of telegraphed, where they're going to be headed next. So they're going to put together reports evaluating their PFML program. So it's likely that they're going to look to make changes to their premium rates, as well as make changes to the program administration itself. So that's going to result in additional legislation, additional rulemaking and additional operational guidance. And that's just something that employers and their administrators are going to have to keep up with and comply with.

Karen Batson: 19:54

All right, last question, which I end every episode with. How does everyone stay apprised of everything

Kristin Seidman: 20:01

I think we've we've talked about the state going on? websites. Also, obviously, a shameless plug for ourselves again. But Lincoln Absence Advisor is a great resource. And LFG.com has a lot of information on the various programs that we try and keep updated as there are changes to each of these programs.

Marissa Mayfield: 20:21

Yeah, I will just add to Kristin's point around the state's websites, most of them also have newsletters that they offer. So if you are interested in information around a particular state, go out on their website, and sign up for their newsletter, because if there's something pertinent that they're doing, and they have a newsletter, nine times out of 10 is going to hit that communication. And so you want to make sure that you're on the receiving end of the latest information.

Trish Zuniga: 20:50

And I will say that compliance with all of these PFML mandates are very confusing, even I'm confused a lot of the time. And the way to just deal with that is to go back to the basics. So ask yourself, those five W's and one H come up with a plan. I think one of the most important questions you have to ask yourself as an employer, is the question on when? And when are those effective dates and the law? And what are those dates for complying with your employer responsibilities? And is there an end date to when you have to comply with that, and a lot of the times if you have these employer responsibilities, you might also have penalties for non compliance. So just remember those building blocks of dealing with you know, a behemoth of a PFML law. Ask yourself those basic questions and then just come up with a plan to tackle it.

Karen Batson: 21:51

Well, thank you all for joining this. i I'm excited for everyone to listen through all the stuff going on, because we know that people are wondering, so appreciate all your time. Thank you, everyone for listening today. And of course, a special thank you to both our product and legal team for joining us for this conversation. If you missed part one where we covered Colorado and Oregon we have that linked in the show description or you can visit us on lfg.com We love to hear from you what you think of the podcast series or particular episode. You can do that by telling your Lincoln benefits professional sharing an episode or even following us on Apple, Spotify or wherever you get your podcasts.

Disclosures: 22:33

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.