As workers across America were wrapping up their workweek to prepare for the 4th of July holiday weekend, Vermont issued a Request for Proposal (RFP) seeking an insurance carrier to offer paid family and medical leave (PFML) benefits first to state employees and then to private employers and individuals in Vermont on a voluntary basis. The RFP identifies this as the Family Medical Leave Insurance (FMLI) program.
I’ve previously written about insured family and medical leave (IFML) products and published a white paper describing such products as the means to fill the gap for states lacking statutory paid family and medical leave laws or programs. While Vermont’s RFP seems very similar to New Hampshire’s PFML law and takes a page from Virginia’s law by opening its insurance market for private IFML products, Vermont has gone about IFML in a distinctive fashion. Rather than pass a law declaring IFML as the means of providing sought-after paid leave as New Hampshire and Virginia have done, the Vermont Human Resources Department simply issued an RFP seeking carriers to respond to offer its FMLI benefits.
Vermont’s Human Resources RFP takes family and medical leave out of the compliance realm, which has plagued employers for decades. Because the RFP is issued by the state Human Resources Department and was not issued pursuant to enabling statute nor by the Vermont Department of Financial Regulation, which governs insurance products, this means that employers don’t have the usual compliance rules by which to abide. The RFP specifies that Phase Two, which opens insurance products to private employers, commits to expand “the FMLI program on mutually agreeable terms” and that Vermont intends for insurance carriers to contract and administer directly with employers. Therefore, the employer has no legal compliance to contend with for FMLI, only the need to follow the insurance policy. Employers are well-versed in employee benefits insurance policies. These RFP statements assume that paid FMLI products are authorized in Vermont without the need for enabling legislation or regulatory permission from the Department of Financial Regulation.
Over the past five years, states have taken the initiative to provide paid leave, especially given the lack of progress at the federal level to enact a nationwide PFML law. However, many states do not have the appetite to mandate paid leave. Vermont has taken a unique approach to ensure paid leave can be provided by initiating the FMLI RFP and opening a marketplace for employers to voluntary purchase IFML as an employee benefit.
Vermont, New Hampshire, and Virginia’s approaches facilitating IFML could be the new trend for paid leave in the United States. Indeed, I expect it to be the next trend as a private market and optional solution is often preferred over government mandates.
FINEOS makes life and leave easier. Carriers that use the FINEOS Platform, a purpose-built SaaS employee benefits platform, can quickly meet new product opportunities like IFML in the market and provide important benefits to employees worldwide.
