State Paid FMLA Authority Examines Process for Private Sector Alternatives
The state’s new Paid Family and Medical Leave Insurance Authority is developing guidelines and processes in advance of the January 1, 2021 target date for taxing employee pay checks.
Connecticut private sector workers will have 0.5% of their wages withheld from that date to fund the state’s paid FMLA program, with benefits beginning January 1, 2022.
The program applies to all private sector businesses with at least one employee, with workers eligible to claim up to 14 weeks of annual paid leave at 95% of their pay, capped at 60 times the state’s minimum wage.
PFMLIA executive director Andrea Barton-Reeves told a recent employer webinar hosted by CBIA the authority has hired vendors to develop a website and a marketing firm for public outreach.
She said the authority was “on target” to meet pending statutory enactment dates.
The solvency of the state’s paid FMLA fund was one of the key concerns raised by employers during the webinar.
An employee earning $56,000 a year will contribute $260 annually to the fund, while being eligible to receive up to $10,800 in annual benefits.
Reeves said she was committed to ensuring the program’s solvency through benefit reductions if necessary—as opposed to shifting new costs to employers—and implementing fraud controls.
Private Sector Alternatives
The authority is also developing a process for approving alternative private sector paid leave programs that will compete with the state plan.
The 2019 law narrowly passed by the state legislature requires the creation of a pathway for private sector plans provided those plans offer the same benefits and were no more expensive for employees.
The authority’s board of directors reviewed a draft process for private plans during its July 9 meeting
Under that proposed process, insurance carriers will submit plan proposals to the Connecticut Insurance Department for approval.
Employers interested in a private sector plan would submit informational materials regarding their selection to employees for their review.
Those employees would then vote whether or not to accept the employer’s plan choice.
The authority’s board approved a requirement that a majority of all employee support of the employer’s choice, not just a majority of those employees that voted.
Once employees approve a private plan, the employer then submits the plan details to the authority, which will review the application and act on it.
The proposed application process is scheduled to be published in the Connecticut Law Tribune for 30 days of notice and comment.
Much work remains before a viable private sector alternative can be created.
For example, there is a lack of detailed information related to the claims administration requirements that will be necessary for private sector companies to develop products and rates.
However, some of the authority’s decisions indicate a private sector alternative is unwanted, or at the minimum, couldn’t be successful.
For example, the authority’s decision requiring a majority of all employees approve a private sector alternative places a significant burden on employers, likely requiring considerable expense educating and engaging employees.
Additionally, unlike the state plan, private sector alternatives must be offered to all employees, not just eligible workers.
More troubling, however, is the fact that under the law, even if all employees support the choice of a private sector alternative, the authority can still reject an application if exempting that employee group from the state plan impacts its solvency.
When pressed on what type of situation could cause that issue, one authority member gave a scenario involving a pool of very highly paid, healthy employees, where the state fund’s solvency would be damaged if a private sector plan application was granted.
In other words, the authority can ensure it has a higher contributing, healthier risk pool and prevent employees from purchasing an alternative to the state plan.
While there are still many months to go before the program is finalized, employers hope many of their questions and concerns will be resolved in a favorable way.
CBIA continues to offer the authority constructive feedback, knowing that this state’s recovery will require a new, more collaborative dynamic between government and employers.
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