Many insurance companies and distributors are eager to talk about government paid family leave programs right now because… they can.
Uncertainty about federal health insurance policy makes coming up with something clear and accurate to say about the future of major medical insurance difficult. Low interest rates, weak consumer finances and uncertainty about federal retirement investment advice standards make talking about retirement plans, and even some types of interest-sensitive personal protection insurance products, more challenging.
One thing benefits players can still offer clients is helping with understanding, and, in some cases, providing, voluntary, or statutorily required, paid family leave programs.
(Related: DMEC Chief: Paid Leave Has Momentum)
The law in that area is changing, but in a way that legislative affairs specialists and compliance specialists can talk about reasonably clearly, not so chaotically that everyone in the audience gets down on the floor and asks for the whirling to stop.
Here are five things for agents and brokers to know about paid family leave now, based on an interview with Brian Dunham of ShelterPoint Life Insurance Co.; a slidedeck used by Breanna Scott and Melissa Oliver-Janiak of Standard Insurance Co. for a recent Disability Management Employer Coalition webinar; and a slidedeck used by Pauline Sobelman of Risk Strategies Co. and Ellen Donovan McCann of Unum Group for another webinar.
1. A new paid family leave program in New York state could help you start conversations.
New York state has a paid family leave law that takes effect Jan. 1, 2018.
Gov. Andrew Cuomo, who signed the bill into law, appears likely to contend for the Democratic presidential nomination in 2020.
The scope of the New York state mandate is similar to the scope of the state’s disability insurance program required under the Disability Benefits Law, according to the Risk Strategies-Unum slidedeck.
The program will be phased in. Workers will be eligible to get half of their weekly wage, up to half of the statewide average weekly wage, for up to eight weeks, during the first year of the program. Workers will be able to get two-thirds of their wage, up to two-thirds of the statewide average weekly wage, for up to 12 weeks in the fifth year.
Those parameters mean that an eligible worker who earns about $1,300 per week, the current statewide average weekly wage, could get a maximum of about $5,000 in paid leave over eight weeks through the new program in 2018. In 2021, when the program is fully phased in, an eligible worker who earned the statewide average weekly wage or more might be able to get a maximum of about $10,000 in benefits.
Workers in New York will be able to use paid family leave to care for a grandparent, a grandchild or a parent-in-law as well as a child, spouse, parent or domestic partner.
For purposes of using paid leave to care for a loved one, a “serious health condition” could be one that requires inpatient care, but it could also be one that requires “continuous treatment” for at least four days.
Workers can also use paid family leave for a number of other purposes, such as bonding with a newborn or a newly adopted child.
The premium for 2018 will be 0.125% of an employee’s weekly wage, up to the average statewide weekly wage. In effect, that means the maximum 2018 premium is $1.65 per week.
2, Getting permission to use an up-to-date paid family leave program mandate map in your marketing materials might be a good reason to get close to DMEC, and paid-leave experts from Standard.
The Disability Management Employer Coalition is a San Diego-based organization for employers, insurers and disability plan services vendors with an interest disability benefits, absence management services, and related products and services.
Scott and Oliver-Janiak of The Standard created a detailed, up-to-date paid-family-leave adoption map for a DMEC webinar they gave June 22.
The map shows exactly which states were at what stage in terms of implementing, thinking about or not thinking about paid family leave.
It is one complicated map, and it’s copyrighted.
Anyone who wants to wow their own webinar audiences with an amazing paid-family-leave adoption map should probably consider trying to ask Scott and Oliver-Janiak about getting the rights to use the map.
The map shows, for example, that many states, including states that have taken a moderate or warm approach to the Affordable Care Act, such as Idaho and Nevada, have no significant legislative activity in the area of paid family leave. Other states, including California and New Jersey, have required many employers to provide paid family leave for years.
3. Providing private insurance for a paid family leave might be practical.
Brian Dunham is the chief actuary at ShelterPoint Life, a company that’s already the biggest provider of the kind of disability insurance that can help an employer meet the state’s Disability Business Law coverage requirements.
He said he thinks insured paid family leave can be practical.
“It works in New Jersey, and I think it will in New York,” Dunham said in an interview.
Some employers have complained about having problems with worker abuse of unpaid leave under the federal Family and Medical Leave Act, and it’s conceivable that a serious epidemic or other incident could lead to a big spike in valid program use.
Dunham argued, however, that many New York state program parameters should help program risk.
Here are some of the stabilizing factors Dunham listed:
Lawmakers wrote a fairly strict definition of “serious health condition.”
About 80% of the leave in similar programs has been associated with bonding with newborn or newly adopted children, and the large size and predictability of bonding-related claims will help stabilize the overall claim rates.
The program design puts low caps on the maximum benefits.
The paid family leave coverage line will make up only a small part of any one issuer’s business.
Issuers will participate in a simple, all-issuer risk-adjustment program, to keep any one issuer from taking on more than its fair share of risk.
Issuers can use any risk-management techniques they use for other products, such as reinsurance.
4. The Senate Finance Committee may be where the action is in Washington.
Paid family leave mandates, or tax incentives, could end up winning some bipartisan support in Washington.
Dr. Ben Carson, who was a Republican presidential contender and is now the secretary of Housing and Urban Development, made big news in the middle of the primary season in 2016, by taking time off to be with his mother, who has Alzheimer’s disease.
Ivanka Trump, President Donald Trump’s daughter, recently wrote an editorial for The Wall Street Journal in support of paid leave.
President Trump has included a proposal for providing six weeks of paid leave for new parents in his budget proposal for fiscal 2018.
Chances are that any paid leave bills that make it through Congress will be bills proposed by Republicans and that attract Democratic co-sponsors.
No bill in the Congress.gov bill tracking system appears to meet that description, but Sen. Deb Fischer, R-Neb., has introduced S. 344, the Strong Families Act bill. That bill — which is in the Senate Finance Committee, which is known for showing occasional flashes of bipartisanship — would provide up to $3,000 in tax credits per year for an employer that provided paid family leave. The employer could use the tax credit to pay up to 25% of the wages for a leave taker for up to 12 weeks of family or medical leave.
5. You could make a little money from paid family leave programs.
When a state lets private insurers sell insured leave program coverage, insurers need some way to sell that coverage to employers.
ShelterPoint Life is still thinking about how its paid-leave rates will work in 2018, but it’s reasonable to think that the company might build sales commissions into the rates, Dunham said.
ShelterPoint Life will probably offer the leave program insurance as an addition to its statutory disability insurance, and the commissions for the leave program insurance will likely be an addition to what agents get for selling the statutory disability insurance, Dunham said.
— Read Paid Family Leave Comes Up During Presidential Debate on ThinkAdvisor