Granite State PFML Program – Gathering No Moss... (and why you should pay attention even if you don’t have New Hampshire employees)

by Marti Cardi, Esq. - Senior Compliance Consultant, Matrix Absence Management

December 07, 2022

 

State paid family and medical leave (PFML) programs just keep rolling along, and that includes New Hampshire's Paid Family and Medical Leave Plan. In the quickest state PFML turnaround timetable to date (and that's not necessarily a good thing in the PFML space) New Hampshire is set to begin offering paid leave benefits to state employees and to the employees of private and non-state governmental employers on January 1, 2023 – barely 6 months after identifying a business partner to administer the program .

Why should you care about the New Hampshire PFML program if you have no New Hampshire employees? Well, it's an approach to PFML that is very different from what other states have implemented, by outsourcing both the risk and the program administration to an insurance company. This might be most appealing to states with small populations, to provide paid leave to employees working in the state but without the monetary risk and administrative burden to the state.

Will it work? Will the model be tried by other states? Already, Vermont is planning to implement a somewhat similar program. The New Hampshire experience for all stakeholders – the state, employers, employees, and the underwriting insurance company – will be watched closely around the country and you might find your own business faced with a similar program in the future. Good to know about it so you can either cheer on or oppose similar programs elsewhere – and be prepared if they pass.

More information about the Vermont program is available here: Governor Phil Scott Launches Voluntary Paid Family and Medical Leave Program | Office of Governor Phil Scott (vermont.gov)

The Basics. Under the New Hampshire program, state employees will receive up to 6 weeks of paid family leave for specified reasons, funded by the state (they already have paid disability benefits). For private employers with a physical presence within New Hampshire, the program is totally voluntary and provides combined paid family leave and paid medical leave. Employers opting into the program can select either 6 or 12 weeks of benefits and those with 50 or more employees total must also provide job reinstatement following leave. Workers can opt in individually if their employer doesn't provide the coverage or if they are a sole proprietor or an independent contractor.

Back in July 2022 we blogged about the New Hampshire program and what we knew (and didn't know) at that time. Since then, we've compiled a lot of details about the Granite State plan. Our "statplans" microsite is undergoing significant revisions as we speak and fresh content will be available here within a short time: Statutory Disability and Paid Family Leave Laws | Reliance Standard/Matrix. We won't regurgitate a lot of lists and numbers and other details here. You can read it at your leisure, perhaps with your favorite adult beverage.

Questions! You've Got Questions!

The state NH PFML website has an FAQ page available here: Frequently Asked Questions | NH Paid Family Medical Leave.

We've received many important questions that aren't necessarily answered on the state website. We'll take those on here. The New Hampshire program is still a work in process, however, and so there are some remaining unanswered questions.

How does NH PFML interact with our short-term disability plans?

The answer to this question is soooo different in New Hampshire than in other PFML states. If you purchase New Hampshire PFML, your company STD policy will be the primary payor for employee health conditions covered by both the STD policy and the PFML plan. Read that last sentence again – it is critical!

That means when an employee misses work due to their own health issues and an STD policy or plan covers the employee's absence, the employee won't get PFML medical benefits unless and until the STD benefits are exhausted. With most STD plans offering benefits in the neighborhood of 26 or even 52 weeks, this will rarely happen. And because the STD plan pays first, the sponsoring employer won't be able to take those state benefits as an offset against the STD plan benefits. The employer has purchased both STD and New Hampshire PFML but, in all likelihood, PFML benefits will rarely be paid for these employees.

And to answer your question, no, an employer cannot just purchase New Hampshire paid family leave. It is both medical and family leave or nuthin.

Well then, shouldn't we just enroll in the state PFML plan and drop our STD plan for our New Hampshire employees?

Probably not. If you do so, you may be cutting your employees' benefits at a time most employers are increasing (or at least maintaining) benefits to stay competitive in the job market:

  • Limited duration of benefits. New Hampshire medical benefits are capped at either 6 or 12 weeks – you choose. But most STD plans provide benefits for more weeks of disability.
  • Lack of coverage during LTD elimination period. Your long-term disability plan probably has a long elimination period before LTD benefits kick in – leaving your employees with extended health issues without coverage for several weeks after exhaustion of New Hampshire PFML benefits.
  • No RTW/rehab benefits. Most STD plans include options for providing employees with rehabilitation services or other benefits tied to getting that employee healthy and back to work. The New Hampshire plan has no such benefits.
  • Lower wage replacement benefits. New Hampshire benefits are paid at 60% of the employee's lost wages. Many STD plans pay at 66% or better of the employee's wages.
  • Even lower wage replacement benefits. Now think about your higher wage earners. Wages for New Hampshire PFML benefits are capped at the federal social security taxation level. The employee's percentage of wage replacement will decline as income increases above this level, leaving many employees with inadequate benefits during their period of disability.

Why should we sign up for New Hampshire PFML for our employees?

New Hampshire lists considerations for adopting the state's plan on their PFML website here: Frequently Asked Questions | NH Paid Family Medical Leave.

In addition, employers purchasing paid leave benefits through the state qualify for a Business Enterprise Tax Credit against New Hampshire taxes equal to 50% of the premium paid by the employer for 6 weeks of coverage.

What should we consider in deciding whether to sign up for the New Hampshire program?

Think about the following:

  • Does the New Hampshire program provide the right kind and dollar amount of benefits for your company's needs, budget, and employee culture?
  • How do the New Hampshire benefits interact or coordinate with your existing company benefits for your New Hampshire employees?
  • How do the New Hampshire benefits compare to benefits available to your employees in other states?
  • Do you have existing disability and family leave benefits – or are you ready to adopt ones – that are sufficient to encourage your workers not to opt in individually? Opt-in employees create administrative duties – see the next question.
  • Employers with 50 or more employees in total (not just in New Hampshire) who elect the state program must provide reinstatement to the same or equivalent position for employees who take covered leave.

What are my company's obligations if we don't sign up for the New Hampshire program but some of our employees opt in individually?

If you do not purchase a NH PFML plan for your employees but any of them opt in individually, the state administrator will let you know. In such case your obligations include the following:

  • Large employers (50 or more employees in total) who do not provide NH PFML (or equivalent coverage) must collect premium payments through payroll deductions for individual workers enrolled in NH PFML and pay those premiums over to the state program (the exact mechanism is not clear yet).
  • All employers must participate in the claims process, handle worker questions and direct them to MetLife, and provide wage and leave information to the state program.

What are my company's options if we don't sign up for the New Hampshire PFML program?

As a New Hampshire employer, you are not required to provide any sort of paid disability or family leave benefits. You can maintain your benefits status quo – whatever that is.

Another option is to provide company-sponsored STD and paid family leave programs designed to fit your company's needs, budget, and employee culture. The same reasons recited by the New Hampshire website for using their program apply to your own company-sponsored benefits (although the tax credit doesn't apply). Plus, your employees' leaves are administered by your company or by your selected leave management business partner rather than by the state.

Will Matrix and/or Reliance Standard offer a New Hampshire PFML plan?

At present we have no immediate plans to design a specific New Hampshire offering. We will continue to evaluate this option as the program rolls out in 2023. In the meantime, Matrix is available to administer company paid parental and paid family leaves and self-funded short-term disability plans. Reliance Standard offers insured short-term disability plans administered either by Reliance or by Matrix in conjunction with other leave management services.

Where can I get more information?

Check out these resources:

Matrix can help!

Matrix and Reliance Standard offer integrated absence and disability management services. Whether your pain point is FMLA, ADA, similar state laws, the new wave of state paid leave laws, STD plans, or some combination (that's the challenge!) we can help. Contact your Matrix or Reliance Standard account manager or send us a message at ping@matrixcos.com for more information.