Employers with a multi-state or national workforce are faced with an ever-increasing landscape of state laws governing leave of absence, paid time off, and workplace accommodations. Indeed, many of these employers offer their own, company-sponsored benefits regardless of whether a state or local law requires the employer to do so. Nine states and Washington, D.C., have passed paid laws governing disability benefits (DI) and/or paid family leave (PFL, often knowns as paid family and medical leave laws (collectively, “PFML”). In most of these states, employers are either required to withhold PFML contributions from employees’ paychecks and remit the contributions to the state fund or offer a voluntary or private benefit plan that is equal to or great than the state PFML. Employee seeking wage replacement benefits when they are absent from work for a PFML-qualifying reason then file a claim with the state to receive the PFML benefits.
Most employers will choose to have employees file for PFML benefits with the state rather than offer voluntary or private PFML benefit plans for reasons such as reducing the employer’s administrative burden and keeps employee and their family member’s medical information at arm’s length. Many insurance carriers are not yet ready to offer an insured PFML or PFL product to meet the voluntary or private plan compliance requirements. As such, these employers and their carriers or TPAs are missing key information that can drive other strategic initiatives; here are 5 reasons why carriers, TPAs, and forward-thinking employers should take note of their employees’ PFML benefit requests, even when they are not administering the benefit:
1. Insight for your long-term disability (LTD) book of business
Carriers and employers that are tracking employees’ state-administered DI and PFML benefits for employees’ own illnesses and injuries have the data analytics to better predict their needed LTD reserves and associated costs. Without insight into the fact that an employee has filed a DI or PFML benefit with the state, a carrier can be blind-sided by an employee’s claim for LTD benefits, not knowing that the employee has been absent during the LTD waiting period and receiving state-administered wage replacement for a disabling illness or injury. At a minimum, tracking state-administered DI benefits can created efficient LTD claims transitioning.
2. Required job-protection
Historically, state-administered DI and PFL benefits did not include job-protection benefits, rather those requirements were placed on employers through separate state laws, such as the case of California’s California Family Rights Act (CFRA), an unpaid job protection law that covers an employee’s serious health condition and for which an employee is typically also receiving DI benefits. However, since 2014, when Rhode Island was the first to require job-protection with its temporary caregiver insurance benefits program (TCI), PFML laws now combine both wage replacement benefits and job protection for employees.
Carriers and TPAs in the absence management administration business must accurately inform employers when their employees are on job-protected leave, such as the federal Family and Medical Leave Act (FMLA) or state-equivalent leave. Thus, by tracking and thereby informing an employer when an employee is receiving PFML benefits from a state a carrier is offering a more compliant absence management service.
3. Workplace accommodation
Carriers are taking a larger role in employers workplace accommodation obligations found under the Americans with Disabilities Act (ADA), state disability discrimination laws, and pregnancy accommodation laws. Carriers and TPAs can assist in the employer’s interactive process and provide data and analytics in large part because carriers are administering employers’ short-term disability (STD) programs. Without access to the data involving employees’ DI and PFML claims filed with a state, however, carriers’ data is incomplete. Moreover, by having a complete data set, carriers are able to assist employers in spotting trends at certain worksites and certain diagnoses and are better positioned to offer workplace accommodations to prevent or minimize employee absences at the outset.
4. Stay-at-work and return-to-work program
Similar to workplace accommodation programs, many carriers have robust stay-at-work (SAW) and return-to-work (RTW) programs, facilitating employees’ ability to remain at work with full pay and associated benefits of participating in the workforce. A carrier that isn’t tracking state-run DI and PFML benefits for its employer-clients will have gaps in their SAW and RTW programs. This might mean a loss in revenue because an employer will not pay for SAW or RTW programs for its employees in states with PFML laws or an inefficient program that cannot demonstrate an ROI to the employer client.
5. Ancillary Voluntary Benefits
Finally, for carriers hoping to offer a full suite of benefits in the employer market, the ability to track state-administered PFML benefits enables the necessary data and insight that carriers need to provide a robust package of voluntary benefits. Many employers look to “top-up” PFML benefits and offer more robust wage replacements. Other employers are looking for additional voluntary benefits for their workforce in an effort to attract and retain talent. Having a full understanding of employees’ time off, including reasons for leave under PFML laws, allows carriers to provide insightful partnerships with their employer clients by understanding the entirety of the workforce’s use of benefits, including state-mandated PFML benefits.
Don’t fall behind!
Rather than ignore the ever-increasing PFML laws, carriers would do best to embrace these laws and understand why tracking employees’ PFML absences and benefits provide an ROI for carriers, TPAs, and employers alike. These laws are not going away and in fact, the day is fast-approaching when employers will demand that carriers track and potentially administer PFML laws at the state and local level and potentially at the federal level as well. Carriers with an early start to tracking state-administered PFML leave will have the data analytics in place to set better reserves and cost-predictions, provide employers with robust analytics, and bolster workplace accommodation, SAW, and RTW programs.
