NH PFL Carrier Complexity

If you’ve ever trained a puppy, you can likely sympathize with the fact that the first time you own a dog is always the hardest.

You don’t have past experience to rely on or learn from. Many things are trial and error. You test what works and what doesn’t and then you go from there. And then after a lengthy period of time, you’ve got a well-trained companion — even if there were some accidents in the house and shoes chewed up along the way.

By the second dog you train, you’re more like a veteran. You’ve got prior experiences to learn from and an understanding of what will work and what won’t. The only trouble is, every dog is different. So, while those prior experiences certainly help, you can’t necessarily coast through the process. 

Preparing and administering the recently passed state Paid Family and Medical Leave laws (PFMLs) is much like bringing home that second, third or fourth puppy. Carriers and TPAs have a strong background and framework to build from, but each one has enough nuanced differences to create headaches. 

As state PFMLs become increasingly common — with New Hampshire’s Granite State Paid Family Leave Plan serving as the latest example — carriers and TPAs are now frequently anticipating and preparing for the next state. The challenge is that each state Paid Family and Medical Leave law comes with its own uniqueness and complexities, presenting difficulties to administer the benefits.

Front and center in New Hampshire’s uniqueness is the fact that of the 10 state PFMLs that have been passed, it is the first Paid Family Leave plan that provides a voluntary participation option for private and public non-state employers and individuals.

The stated intent of the program is to use the state’s purchasing power to provide an incentive for carriers to contract with the state to administer the plan.  As a condition of winning the state contract, the winning bidder(s) must allow non-state employers and individuals to participate in the state plan. The state believes that this will require the carrier(s) to create and offer an affordable paid family leave plan that employers and individuals can buy into.

But will that prove to be the case? We won’t know until after the program rolls out at the start of 2023. The aggressive timeline set forth by New Hampshire puts carriers bidding to win the state in a challenging position. The state has until the end of March 2022 to issue requests for proposals, leaving little time for the winning carriers to meet the requirements for the state, which still need to be fully defined and ironed out.

What’s in the New Hampshire Plan and Why is it Unique?

The new law provides paid family leave benefits to state employees effective January 1, 2023.  State employees will receive a wage-replacement benefit of 60 percent of their average weekly wage capped at the Social Security taxable wage maximum for up to 6 weeks per year.  The plan covers leave for the family care reasons outlined under the federal Family and Medical Leave Act (FMLA). It does not cover paid medical leave for an employee’s own illness for state employees or employees covered under a voluntary non-state employer plan. The plan will be provided and administered by an insurance carrier under contract with the state. It is unclear from the language in the bill whether there will be a single carrier chosen or if multiple carriers will be able to participate.

As mentioned above, the Granite State Paid Family Leave Plan is different from other Paid Family and Medical leaves currently in existence in that it provides a voluntary participation option for private and public non-state employers and individuals. Under the voluntary option for non-state employers, employers with more than 50 employees can choose to contract with the carrier administering the state employee plan to provide paid family leave coverage for their employees. The plan includes job protection, health insurance coverage continuation during the leave and non-discrimination and non-retaliation provisions applicable to employees whose employers are voluntarily participating in the plan.  Finally, the plan also includes a provision allowing employers who are participating voluntarily in the plan to claim a tax credit for 50% of the premium cost paid to provide paid family leave to their employees.

Individuals whose employers either choose not to participate in the plan or who do not qualify for the more than 50 employee threshold, will be able to voluntarily participate in the program  through a purchasing pool. Although state employees and employees of private and public non-state employers are not eligible for medical leave under the plan, individuals who voluntarily participate in the plan through the purchasing pool can take medical leave for non-work related medical conditions if their employer does not provide short-term disability insurance. It is unclear from the language of the statute whether individuals who opt-in to the purchasing pool will receive the same job protection, health insurance coverage continuation, and non-discrimination and non-retaliation protections that employer-covered employees are entitled to but the likely answer is that they will not be entitled to those protections. 

As explained above, the benefits for New Hampshire state employees must be available as of January 1, 2023 and the language of the bill states that coverage must also be available for purchase by private and public non-state employers and individuals by that date.

The language of the statute is very high-level so interested parties will have to wait for some time to get clarity on what will be available and what will be required under the statute. The statute indicates that a variety of details of the leave administration will be fleshed out by the Commissioner of the Department of Administration Services. We may not know much more until that happens.

Continuous Change and Tight Timeframes Highlight Need for Agile, Configurable Absence Management Technology

The aggressive timeline set forth by New Hampshire will mean that for the first time ever, three states are expected to roll out a PFML program in a span of 12 months. What is already a tall task for carriers and TPAs is further complicated by the fact that there’s still much to be determined in those three states: Oregon, New Hampshire and Colorado.

Oregon, which had a planned rollout date of January 1, 2023, is seeking to push back that date to September 3, 2023. The state still has not announced whether it plans to administer its PFML in-house or outsource to a carrier, such as what New Hampshire is planning.

Colorado, which became the first state to pass PFML by ballot initiative, isn’t set to be rolled out until January 1, 2024, but again, details for the Colorado plan are scarce at this point.

So in a span of 12 months starting in January 2023, we’ll have the following:

  • A PFML program that may be self-administered by the state of Oregon or a vendor
  • The first-ever state Paid Family Leave program that will be outsourced to one or multiple carriers
  • A third state PFML (Colorado) that also may be self-administered by the state or a vendor

The ability to win business for these different programs comes down to underlying technology that provides insurance companies and TPAs with the agility and framework to quickly incorporate the state-specific regulations into their existing model.

The COVID-19 pandemic has accelerated many companies’ timeline for digital transformation of front and back-office systems.  In our 2021 Strategic Priorities research, improving digital capabilities was the top ranked internal challenge among insurance industry Leaders – 40% higher than industry Laggards. As we look at the future of PFML in the United States, the importance of a sophisticated, leading absence management solution couldn’t be clearer. 

Success of New Hampshire Voluntary Paid Family Leave May Come Down to Education, Awareness and Engagement

While New Hampshire’s Granite State Paid Family Leave Plan will cover all state employees, the program is voluntary for the rest of employees working in New Hampshire, meaning the market opportunity for the carrier or carriers who win the state plan is relatively unknown. We don’t have historical data on the uptake rate for a voluntary program, but we do know employees tend to lack an understanding of PFML. 

In Majesco’s FMLA and PFL Knowledge Gap Studypublished earlier this year, we found that employees are not familiar with whether their state offers a PFL program or not. A majority of employee respondents (67%) incorrectly stated that they live in a PFL state when they don’t or responded that they don’t live in a PFL state when in fact they do.

Given that New Hampshire will have the country’s first voluntary program, there’s a higher likelihood that employees within the state are unfamiliar with the offering and what exactly it covers. In the same research, we found that just 47% of employees who currently work in a PFL state were able to correctly identify the leaves that they are eligible to take.

The voluntary participation in the state program from private and public non-state employers and individuals will ultimately be what determines the program’s success and longevity, and education and awareness will be front and center in whether the participation meets what the carrier(s) bidding on the state plan are hoping for to deem it successful.

Co-authors:

Angie Brown, Sales Director, Absence Practice Leader, Majesco
Lynne Sousa, Senior Absence Management and Compliance Counsel, Majesco

The post NH PFL Carrier Complexity appeared first on Majesco.

Original source: https://www.majesco.com/nh-pfl-carrier-complexity/

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