Executive Summary

Absence management programs are under increasing pressure from regulatory expansion, workforce complexity, and heightened employee expectations. Traditional operating models, reliant on manual case handling and fragmented systems,are no longer sufficient at scale. Artificial intelligence (AI) is emerging as a practical enabler, not as a replacement for human expertise, but as a mechanism to improve consistency, efficiency, compliance, and the overall employee experience.  This is being accomplished through both operational execution and technology development, and points toward a more streamlined ecosystem in the near and longer-term future.

The Operational Impact of AI in Absence Management

Shifting from reactive case handling to guided employee journeys

Operational friction in absence programs is highly predictable. Intake errors, incomplete documentation, repetitive employee inquiries, and complex policy interactions account for a significant share of administrative burden. AI-powered conversational tools are increasingly deployed to manage these high-volume, low-variability interactions.

Rather than replacing case managers, however, AI can enable guided leave journeys —helping employees initiate requests, understand requirements, and receive timely updates without needing repeated human intervention. It can also improve clarity and consistency while reducing call volume and manual effort.

Reducing cycle times through targeted automation

Absence operations involve extensive repetitive work: generating notices, tracking deadlines, verifying completeness, and summarizing case histories. AI-driven automation can support these tasks by drafting correspondence, flagging missing information, and consolidating timelines for faster review.

Organizations such as the International Foundation of Employee Benefit Plans (IFEBP) emphasize that AI adoption in leave management is increasingly focused on speed, accuracy, and employee understanding, not simply cost reduction. Many vendors are therefore responding by embedding AI directly into absence workflows rather than positioning it as a standalone tool. The operational result is improved throughput, fewer reopenings, and more predictable outcomes.

Enabling proactive workforce planning

Historically, absence management has been reactive: organizations respond after a leave occurs. AI can enable predictive insights, including forecasting absence likelihood and duration to support staffing and coverage planning. Machine learning models can identify absence patterns and duration risk, while also emphasizing the need for validation, explainability, and ethical safeguards.  When used appropriately, these insights support planning and early intervention, and improved workforce scheduling and roster stability.

Strengthening compliance and risk controls

Absence and disability programs have inherent compliance risk, and can be subject to inconsistent decision-making, and financial leakage. AI techniques long used in insurance, such as anomaly detection and predictive flagging, can be applied to help focus investigative and quality assurance resources. Crucially, these tools are designed to surface risk signals, not replace human judgment. Oversight will remain essential, particularly in medically and legally sensitive cases.

Technology Development Trends Shaping the Future

Natural language as the primary interface

Absence management is policy-intensive and emotionally complex, making it well suited for natural language systems. Modern platforms are building AI capable of interpreting employee questions, retrieving relevant policy language, and providing clear explanations—while escalating uncertainty to human specialists.  While trust is foundational, effective systems are able to prioritize:

• Policy-source transparency
• Clear escalation paths
• Guardrails that prevent overreach
• Empathetic, employee-appropriate language

Intelligent document processing

Medical certifications and eligibility documentation remain unavoidable. Next-generation platforms are moving beyond digitization to document intelligence—extracting structured data, identifying missing elements, and summarizing key information automatically. This can reduce reviewer fatigue and improve consistency across cases.

Predictive analytics with governance

Predictive absence models are transitioning from experimentation to production. However, research in absenteeism prediction underscores the importance of bias testing, explainability, and appropriate use boundaries. Leading organizations are therefore pairing predictive analytics with governance frameworks that define acceptable use cases, monitor outcomes, and ensure privacy-by-design principles.

What Organizations Can Expect

In the near term, or over the next one to three years, the absence industry can expect to see a number of enhancements in the way that insurance carrier and third-party administrator (TPA) service models are operating as a result of AI utilization, such as:

• AI copilots supporting case managers with summaries, next-step guidance, and draft communications
• Employee-facing AI assistants embedded into delivery models
• Expanded use of predictive analytics for staffing and capacity planning
• More sophisticated fraud and leakage detection adapted from insurance analytics

In the longer term, the most significant shift is anticipated to be architectural. Absence, disability, payroll, and HRIS systems will increasingly operate as better orchestrated ecosystems, with AI coordinating workflows across platforms. Additionally, organizations can expect continuous compliance models, where policy changes are proactively tested against real scenarios and documented automatically reflecting broader AI governance trends in what has become an increasingly regulated and ever-changing industry.

Conclusion

AI is not transforming absence management by eliminating human involvement. Instead, it is enabling human-centered, scalable operating models that can reduce administrative burden, surface risk earlier, and improve the employee experience without sacrificing compliance or judgment.

In a recent article featured on the New England Employee Benefits Council (NEEBC)’s blog, our Consultant, Grace Giannattasio, provides a state-by-state update on PFML changes in 2026 in the New England area. You can find NEEBC’s full article here.

As summer winds down, the Disability Management Employer Coalition (DMEC) hosted its 2025 Annual Conference in vibrant Austin, TX, a city known for its live music, bold flavors, and innovative spirit. The dynamic setting was the perfect backdrop for this year’s conversations around the ever-evolving world of absence, accommodations, compliance, and employee wellness. Professionals from across the industry gathered to unpack new legislation, discuss workplace trends, and explore tech-driven solutions to modern challenges. Here are three key themes that emerged from this year’s conference:

1) Championing Wellbeing

Mental health has been a conference staple in recent years, but 2025 brought a more integrated, human-centered approach. Discussions extended beyond mental illness to resilience, emotional intelligence, caregiving, and holistic employee support strategies. The rise of neurodiversity, trauma-informed leadership, and care-inclusive policies showcased how employers are adapting to meet a broader spectrum of employee needs.

– In the session, “Compassionate Leave: Reimagining Employee Well-Being,” presenters explored how companies are expanding leave programs to support emotional well-being, not just physical health.

– A dynamic discussion titled “Neurodiversity in the Workplace: Employee Expectations and Employer Obligations” highlighted how organizations can create inclusive environments and meet accommodation needs for neurodiverse employees.

– In “Empowering Caregivers in the Workplace: A Collaborative Approach to Well-Being,” panelists shared strategies to support the growing population of working caregivers through benefits design and workplace flexibility.

2) Technology & AI

This year’s sessions made one thing clear: we’re at a true inflection point when it comes to technology. With AI, data integration, and digital tools maturing, organizations are rethinking how leave is managed, from predictive analytics to employee experience platforms. Several thought leaders challenged the industry to balance automation with empathy, and to ensure tech doesn’t come at the cost of compliance or care.

– In the session, “Technology Can Make All Your Absence Dreams Come True … Or It Can Be Your Worst Nightmare!” speakers tackled the pros and cons of tech platforms, with a focus on implementation pitfalls and how to avoid them.

– During “Defining the Future of AI in Absence Management: Review of Think Tank Findings,” presenters walked through key outcomes from a recent industry think tank focused on the ethical use of AI in leave processes.

– The presentation, “There’s an AI for That! The Future of Integrated Absence Management and How AI Connects the Dots,” showcased how leading employers are already using AI to streamline decisions and improve the employee experience.

3) Compliance & Accommodation Strategies

Compliance remains a foundational topic, and this year brought a new level of pragmatic guidance and real-world scenarios. Sessions ranged from ADA accommodations and “good faith” practices to FMLA audits and courtroom insights. The clear takeaway? Employers must remain agile and informed while developing repeatable, scalable compliance frameworks.

– The Preconference Workshop, “Taking Back Your Plan: A Practical Guide for Effective Policy Development,” run by Spring Consulting Group, helped employers navigate federal, state, and local leave laws as they build or update internal policies. We also explored benchmarking strategies and outlined the changes employers need to get their benefit programs back on track.

– In “Recent Jury Verdicts Involving Leave and Accommodation Issues,” a legal expert reviewed real court outcomes to help employers better understand risk and strengthen their policies.

– A panel-led session, “Getting Alice out of Wonderland: How to Address the Realities of Accommodations Management,” shared tactical guidance on how to navigate tricky and often ambiguous accommodation requests.

Final Thoughts

The DMEC 2024 Annual Conference in Nashville was a resounding success, filled with opportunities to learn, connect, and share best practices. From deep dives into compliance and mental health to exploring the latest technological innovations, the conference offered something for everyone. As always, it was a pleasure to reconnect with industry leaders and bring back fresh ideas to enhance our consultative offerings. We’re already looking forward to what next year’s conference will bring!

Title:

AVP – Absence and Disability

Joined Spring:

I joined Spring in January 2024

Hometown:

Chesterfield, MA (near Northampton)

At Work Responsibilities:

I help employers navigate complex absence and disability laws and develop customized absence and disability programs that are both compliant and strategically aligned with their goals. Simultaneously, I support absence and disability vendors in developing and launching new products, from drafting policy forms to creating marketing collateral.

Outside of Work Hobbies/Interests:

Cycling, pickleball, gardening

Fun Fact:

In high school, my summer softball team made it to nationals 2 years in a row. I was an academic all-American squash player in college.

Do You Have Any Children?

Two amazing adult humans, ages 28 and 25 – and 3 equally awesome grandchildren with a 4^th arriving at the beginning of 2026!

Favorite Band/Musician:

I have loved Melissa Etheridge since I played frisbee with her and her band on the lawn of my dorm at Smith College in 1990 and she signed my cassette of her first album! I have seen her in concert at least 20 times.

Favorite Book:

A Gentleman in Moscow

Spring Consulting Group is contracted with the State of Maine to conduct actuarial studies of the Maine Paid Family & Medical Leave (PFML) trust fund. You can read the full press release here.

As spring unfolded, the 2025 Disability Management Employer Coalition (DMEC) Compliance Conference brought together absence management professionals from across the nation to explore emerging trends, compliance strategies, and innovative solutions in the world of leave management. Held in Columbus, Ohio, this year’s conference offered in-depth sessions on pressing issues, including compliance, mental health accommodations, technological advancements, and diversity in the workplace. Here’s a look at some of the key topics that were discussed:

1) Navigating Complex Compliance Challenges

With the ever-changing landscape of leave and accommodation laws, staying compliant remains a top priority for employers. This year’s conference offered valuable insights into managing the intersection of federal and state regulations. Experts shared practical advice on how to avoid common mistakes and streamline compliance efforts across diverse workforces. Here are some noteworthy sessions:

• DOL Updates: 2025 and Beyond

This session offered a deep dive into upcoming changes to the Department of Labor’s regulations and what HR teams need to do to stay ahead of the curve.

• When the PWFA, ADA, PUMP Act and FMLA Intersect: How to Unravel from a Tangled Mess

Speakers unpacked the complexities of these intersecting laws and shared strategies for managing situations where they overlap.

• Navigating the Bermuda Triangle: PFML Private Plan v. State Plans

Our team was joined by a regulator, attorney, carrier, and employer to outline the different use cases and provide audience members with a framework for making a decision about whether they should file a private plan or stay with the state.

2) Mental Health Support

Mental health remains a cornerstone of today’s workplace benefits, and the conference didn’t shy away from tackling this critical issue. Sessions focused on creating a supportive environment for employees experiencing mental health challenges. These discussions provided actionable strategies for maintaining compliance while prioritizing employee well-being:

• I’m Stressed! Managing Psychological Disability Claims in the Workplace

Experts explored best practices for managing mental health claims, with a focus on the unique complexities of psychological disabilities in the workplace.

• Balancing Care and Compliance in the Complex Landscape of Mental Health Accommodations and Leaves

This session helped employers navigate the delicate balance of offering accommodations while staying compliant with ADA and FMLA guidelines.

• The Mental Health LTD Challenge: Because Parity is Not a Priority… Yet

A deep dive into how mental health conditions are handled under Long-Term Disability (LTD) policies and the ongoing challenge of achieving true mental health parity in benefits.

3) Innovations in Leave and Accommodation Management

Technology continues to transform the way employers manage leave and disability claims. This year’s conference highlighted cutting-edge tools and strategies, including the use of artificial intelligence (AI) to streamline compliance processes, as well as other technologies to support for disability management. These sessions explored how employers can leverage technology and data-driven insights to improve leave management and drive better outcomes:

• Artificial Intelligence, Automated Systems, and Leave and Accommodation Compliance

This session explored how AI is reshaping leave management, helping employers automate compliance and improve accuracy in decision-making.

• Transforming Disability Management: Evidence-Based Solutions with Psychedelic-Assisted Therapy

One of the most forward-thinking sessions, this presentation discussed the growing role of psychedelic-assisted therapies in managing mental health conditions in the workplace.

• Remodeling Your RTW/SAW Program with 5 Innovative Tools

Participants learned about five new tools designed to optimize Return-to-Work (RTW) and Stay-at-Work (SAW) programs, improving the experience for both employers and employees.

The 2025 DMEC Compliance Conference provided a comprehensive overview of the challenges and opportunities facing HR and absence management professionals today. From navigating complex compliance requirements to embracing new technologies and supporting employee mental health, the conference highlighted the evolving nature of leave and accommodation management. With valuable insights and actionable strategies, attendees left the conference better equipped to address the needs of their diverse workforces while staying compliant with an ever-changing legal landscape. We’re already looking forward to what next year’s conference will bring!

There was a flurry of activity at the federal level that involved state and local paid family and medical leave (PFML) programs in the days leading up to President Trump’s inauguration. Both the Department of Labor (DOL) and the Internal Revenue Service (IRS) provided additional guidance and clarification, which is summarized in this Alert.

I. DOL Opinion Letter Clarifies Interaction of FMLA and State of Local PFML Programs

As the paid leave landscape has evolved, employers have struggled with how to reconcile compliance with the Family and Medical Leave Act (FMLA) with that of state or local paid family and medical leave (PFML) programs. While running FMLA, PFML, and other leaves concurrently has been a common and often recommended practice, understanding specific rules that apply in these scenarios has long been a concern for employers. The Department of Labor, in recently issued DOL Opinion Letter FMLA2025-1-A, finally addresses the interplay between the FMLA and state or local PFML programs when an employee’s absence qualifies for both.

The core issue explored in the opinion letter is how the FMLA’s “substitution” rule operates in these concurrent leave scenarios, particularly regarding the use of PFML and whether the same principles as those that apply to disability plans and workers’ compensation benefits apply to PFML. The substitution rule generally allows an employee to elect, or an employer to require that an employee, substitute accrued employer-provided paid leave (including vacation, PTO, or sick leave) while also falling under the protections of unpaid FMLA leave, which means that the employee can elect to have, or an employer can require, that the employer-provided paid leave run concurrently with FMLA leave. Employers have long been uncertain how to apply the rule when state or local PFML benefits are also involved.

The opinion letter clarifies that the FMLA substitution rule does not apply when employees receive benefits under a state or local PFML program, just as it does not when the employee is receiving paid disability or workers’ compensation benefits. This clarification means employees can choose, or be required by their employer, to use their state or local PFML concurrently with FMLA leave. The DOL emphasizes that this coordination is permissible even if the state or local law does not explicitly address the interaction with FMLA and offers employers a clearer framework for managing these often complex leave situations.

Another key takeaway from the opinion letter is that using state PFML concurrently with FMLA leave does not diminish the employee’s protections under FMLA. The FMLA’s 12 weeks of leave remain protected, regardless of whether the employee receives state or local PFML benefits during that time, thereby ensuring that employees receive the full federal protection of the FMLA while also accessing state or local benefits.

Additionally, the DOL’s guidance touches upon the implications of PFML providing partial income replacement. If an employer offers employer-provided accrued paid leave benefits in addition to state or local PFML, the opinion letter suggests that these employer-provided benefits can also be used concurrently with FMLA leave to “top off” the PFML benefit.

This opinion letter is significant because it provides much-needed clarity in an area where confusion often arises. The increasing prevalence of state and local PFML programs necessitates clear guidance on how these laws interact with the FMLA. By addressing the substitution rule in this context, the DOL helps employers navigate the complexities of concurrent leave and ensures employees understand their rights and options.

Ultimately, FMLA2025-1-1 aims to streamline the administration of FMLA leave when state or local PFML is involved, promoting a more consistent and predictable approach for both employers and employees. It reinforces the principle that the FMLA provides a baseline of protection, which can be supplemented by state benefits, without diminishing the federal entitlement.

Next Steps for Employers:

Employers should carefully review DOL Opinion Letter FMLA202-1-A and ensure that their current policies and procedures are consistent with the new guidance.

II. Navigating the Tax Implications of State PFML Programs

The rise of state-level PFML programs has brought a wave of tax-related questions from employers, employees, and other stakeholders. Previously, state guidance on PFML taxation was often vague, leaving many to seek expert advice. However, the IRS issued Revenue Ruling 2025-4, providing much-needed clarity on these complex issues.

Federal Tax Implications:

• Employer Contributions: Generally, employer PFML contributions are excluded from an employee’s gross income and are not subject to FICA, FUTA, or federal income tax withholding.
• Employee Contributions: Employee PFML contributions are typically considered after-tax and are therefore not subject to federal taxation. If an employer funds the employee portion, this payment is considered additional compensation and is subject to FICA, FUTA, and income tax withholding.
• Benefits Paid: The tax treatment of PFML benefits depends on whether the leave is for medical or family reasons, and whether the benefit is attributable to employer or employee contributions. Some states specify contribution allocations (e.g., Delaware, Massachusetts, Minnesota, New Jersey, New York), while others do not, potentially creating ambiguity for employers.
  • Medical Leave:
    • Employer-Attributable Benefits: Included in federal gross income as wages, subject to sick pay reporting rules, and considered third-party payments of sick pay.
    • Employee-Attributable Benefits (or Employer-Funded Employee Portion): Excluded from federal gross income.
  • Family Leave:
    • Employer-Attributable Benefits: Included in federal gross income (not wages). The state must file with the IRS and issue a Form 1099 to the employee.
    • Employee-Attributable Benefits (or Employer-Funded Employee Portion): Included in federal gross income (not wages). The state must file with the IRS and issue a Form 1099 to the employee.

State Tax Implications:

State tax treatment of PFML contributions and benefits varies. Employers must consult the specific laws, rules, regulations, and guidance for each state program to ensure compliance.

PFML Contribution Requirements:

In 2025, state PFML programs have varying requirements for employee and employer contributions when the employer participates in the state plan. Exceptions may apply based on employer size or private plan offerings. Consult the specific state program details for accurate contribution requirements.

Next Steps for Employers:

Employers should carefully review Revenue Ruling 2025-4 and any related state guidance. During the 2025 transition period, adjustments to taxation practices may be necessary. This may include updating employee handbooks, policies, FAQs, payroll systems, and other relevant resources. Proactive compliance is crucial, as employers are generally responsible for the correct administration of these programs.

For further questions or assistance regarding either the DOL Opinion Letter or the IRS Revenue Ruling, please contact Spring.

We recently published an article on Neebc.org spotlighting some Paid Family and Medical Leave updates across New England in 2025. You can find the full article here.