As summer winds down, the Disability Management Employer Coalition (DMEC) hosted its 2024 Annual Conference in the energetic city of Nashville, TN. Known for its rich musical heritage, Nashville provided a lively backdrop for this year’s event, bringing together professionals from across the absence management spectrum to discuss the latest trends, challenges, and best practices. Here are some key highlights from the conference.

1) The Future of Paid Family and Medical Leave (PFML)

The focus on mental health remains prevalent as organizations continue to find innovative ways to support employee well-being. This year’s conference offered valuable insights into how mental health is evolving in the benefits industry:

-The session The Importance of a Guided Claim Experience emphasized the need for compassionate and informed support during the claims process, which can significantly impact employee well-being.

– I was joined by a group of leave solution leaders to examine findings from a recent leave report which looked at various factors including recruitment, retention, productivity, moral, and more with a focus on how successful employers are addressing leave managementns on benefits spend and workplace culture.

– One of the catchiest presentations, Walk, Crawl, Run: The PWFA Turns One, reflected on the one-year anniversary of the Pregnancy Workers Fairness Act (PWFA) and best practices for HR teams to stay compliant.

2) ADA/FMLA Compliance Updates

Navigating the complex web of federal, state, and local regulations remains a critical challenge for employers. This year’s sessions provided valuable guidance on staying compliant while managing diverse and geographically dispersed workforces:

3) Telework Accommodations

As companies continue to navigate the post-pandemic landscape, finding the right balance between remote work and returning to the office is top of mind. The conference sessions provided practical insights into managing this transition effectively:

– The session “You Can Have Paid Leave AND a Productive Workforce. Here is the Secret Sauce.” explored how flexible work arrangements can coexist with robust paid leave policies to enhance employee satisfaction and productivity.

– Council from Reliance Matrix explained how many employers are quick to provide leave of absence to workers with a medical condition, whereas many alternative compliant leave options exist in their presentation, Encouraging Employees to Stay at Work or Return to Work.

–Another eye-catching session, We Goofed. Now What? An Accommodations Tale, brought light to a common scenario in which an employer fails to provide adequate accommodations under the ADA and/or PWFA; as well as best practices to address said employees’ needs.

4) Tech/AI’s Role in Absence Management

Technology continues to play a transformative role in the absence and disability management space, offering new ways to streamline processes and improve decision-making:

– Spring’s in-house attorney, Lynne Noel, together withPatagonia’s Senior Manager, Leave of Absence, Lauren Shipper, discussed Using Benchmarking to Refresh Your Program. They highlighted the importance of leveraging data to stay competitive and refine absence management programs. Insights provided actionable strategies for using benchmarking as a tool for continuous improvement.

– A group of data analytic experts explained the practical parameters of AI solutions in claims processes and the upsides and dangers to implementing AI systems in their presentation, The Transformation: How AI is Enhancing Analytics and Optimizing Decision-Making.

– During the session, The Future of AI in Leave and Disability Management, three leave and disability administrators discussed the current state of AI in the industry and how it can help streamline processes and improve employee satisfaction.

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!

The absence management conversation is a critical component of every employer’s broader employee benefit strategy discussion these days, especially given the competitive talent market and the rapidly evolving regulatory landscape surrounding leave of all types and at all levels (federal, state, local). Now, more than ever, employers and employees need to understand how all available benefits, including supplemental health plans, such as Accident, Critical Illness, and Hospital Indemnity, work together. Compliance isn’t the only consideration, though. Employers need to be sure not to duplicate processes which can increase costs as well as to ensure a smooth and positive employee experience.

Understanding supplemental health products and the benefits provided by them ensures that those paying for the coverage will fully utilize the benefits available. Since Accident, Critical Illness, and Hospital Indemnity benefits are paid when an accident occurs, a critical illness is diagnosed, or a hospital stay is required due to injury or illness, they offer a way to fill in the financial gaps left by traditional health insurance, disability coverage, and paid leave benefits. The lump sum benefits paid by the supplemental health plans can be used to cover out-of-pocket expenses like medical copays and deductibles, as well as to supplement the income replacement benefits provided by paid leave and/or disability plans.

The good news is that insurance carriers have made significant progress over the last few years toward the integration of absence and supplemental health products.1 Many are, now, not only bundling supplemental health products with their core disability and absence products and offering a package discount to the core products when quoting, but also tackling the more complex issue of how to ensure that employees enrolled in supplemental health plans are receiving the financial benefit of the products they pay for with payroll deductions.

To ensure that supplemental health plan participants receive the benefits they are entitled to under their policies, most carriers are digging into questions like:

Carriers are also reviewing their processes to find efficiencies and create a better claimant experience. This internal retrospection has led to things like coordinated leave, disability, and supplemental health claim intake and the sharing of medical information across all claims. Many carriers are not only building out coordinated claim paths and workflows for leave, disability, and supplemental health claims, but they are also having their leave and disability claim specialists conduct routine analysis of current leave and disability claim files to see what other coverages an insured is eligible for and whether the medical information on file could be used to adjudicate the corresponding supplemental health benefit claims. Some carriers who have access to medical claim files offer auto-generated notifications, which are sent to supplemental health plan participants, reminding them of their supplemental health benefits based on the medical claim data. Software and technology companies as well as third-party administrators (TPAs) who often handle leave benefit administration are also focused on product improvements in the areas of artificial intelligence (AI), automations, self-service portals, communications, intake, and reporting. All these claim process adaptations alleviate steps for the insured and make it easier, overall, for them to know what benefits are available and be able to utilize them. They also help claimants to maximize the value of the benefits for which they are paying and enhance the customer experience that is top of mind for employers of all types, sizes, and industries.

1 Spring Consulting Group.  2022-2023 Integrated Disability, Absence, and Health and Productivity Vendor Benchmarking Survey.

The world of employee benefits is ever-changing. What’s hot one year may not be the next, and we are constantly seeing new products and vendors enter the market. The ebb and flow of employee benefits are typically driven by factors like workforce demands and demographics, the landscape for retention and recruitment, the economy, trends in the healthcare industry, and technological advancements. Sometimes, though, the most prominent trends stem from employers wanting to go back to the basics to understand what will drive value for employees and yield results.  This doesn’t always mean selecting the “big shiny object” of the moment.

Right now, we’re in a post-pandemic world, with an economy that seems to be recovering but still has many weary, and healthcare costs that just won’t quit. Given these factors and what we are hearing from clients and colleagues, we’ve put together this list of benefits areas you should be paying attention to in 2024.

1. Healthcare Affordability

Healthcare cost trend for 2024 is projected to be around 7%. Prescription drug costs are a large factor within this bucket, but so are inflation, healthcare worker shortages, and other causes. As a result, many organizations are strategizing around how they can offer benefits that are more affordable not just for them but for their employees. Some tactics include taking a fresh look at your plan design, cost-sharing model, and pharmacy benefit program. We are also seeing a big push toward alternative funding like captive insurance or other self-insured models. Employers may also want to take more simple actions like reprioritizing preventive care and wellness to lessen the prevalence of chronic conditions and avoid high claims costs.

Another big trend is the coverage of GLP-1 drugs for weight loss, such as Ozempic and Wegovy, a decision over which many employers are weighing the pros and cons.

2. Financial Wellness

Related to affordability, there has been a resurgence of interest in programs like 401(k)s, pension plans, student debt repayment benefits, tuition reimbursement, financial literacy and coaching, and the like. In fact, Wellable reports that 30% of companies have increased their budgets related to financial wellness in 2024. Last year, IBM announced they were bringing back their pension plan in place of their previous 401(k) match program. Regardless of your priorities, there is a large market of solutions available. We recommend doing a deep dive into your population’s needs and assessing current options (e.g., 401(k) company match), to better understand how you can strategically enhance financially focused benefits.

3. Family-Forward Benefits

Benefits with families in mind include programs around parental leave, family and medical leave, caregiver leave or assistance, women’s health and reproductive benefits, bereavement leave, childcare assistance, flexible work schedules, and more. A dependent care flexible spending account (DCFSA) is a specific solution that can offset the costs of daycare or other needs. If you’re looking to make your programs more family-friendly, check out this checklist.

4. Customization

Offering tailored benefits that are personalized for an employee will continue to be a leading objective. This might include benefits like Lifestyle Spending Accounts, flexible time off or hybrid work models, voluntary benefits like pet insurance or identity theft, commuter benefits, Flexible Spending Accounts (FSAs), and more. This approach means ensuring your program is inclusive of all employees regardless of geography, gender, age, race, sexual orientation, etc., and allows for choice between the options available. It also means meeting employees where they are and ensuring you are covering your bases when it comes to telehealth and mental health services.

5. Upskilling & Professional Development

Employers increasingly understand that it is often worth the investment to upskill current talent rather than to continuously hire out for certain roles. This is not only good for business but goes a long way in the realms of employee morale, engagement, and productivity. In fact, a 2022 Conference Board report found that 58% of those surveyed would be more likely to leave if not provided professional development skills and opportunities. As such, we have seen an uptick in programs surrounding mentorship, education and training, including learning management systems, peer coaching, job rotations, and well-defined career paths based on certain milestones.

We’re excited to see these trends take shape and the impacts they’ll have on the benefits sphere! If you could use help evaluating or implementing any facet of your benefits program, please get in touch with the Spring team.

Preventive care is a critical component to wellness. Often people without known health issues overlook their preventive care, but it is critical to prevent illness as well as identify conditions or diseases early on. Healthcare has historically focused on treatment of disease, but prevention is just as important, and employers are focused on prevention in order to manage cost, productivity and overall employee wellbeing. 

Defining Preventive Care

Preventive care begins with an annual visit to your primary care provider, which may be a physician assistant, nurse practitioner, or medical doctor.  These providers practice general medicine and can be your gateway to additional providers as necessary.  In some instances, OBGYNs may also be deemed primary care providers. 

Since the Affordable Care Act (ACA) was passed, true preventive care has been available at no out-of-pocket costs for individuals enrolled in health insurance through their employer or the marketplace, assuming they seek care in-network. Additionally, utilization of preventative services can lead to decreased medical care costs due to decreased inpatient care and higher prioritization of a healthy lifestyle. In fact, the National Center for Biotechnology Information reported that a 90% delivery rate of primary preventive services could reduce healthcare expenditures by $53.9 billion.

While the minimal cost of these services for individuals should encourage high utilization, very few people access all the recommended preventive services, and this has declined over the past decade. For instance, in 2015, 8.5% of adults aged 35 and above received appropriate recommended clinical preventative services. This decreased to 6.9% in 2018 and 5.3% in 2020.1 While the use of preventive services in 2020 took a hit largely due to the COVID-19 pandemic, the negative trend in general is cause for concern. The cause for this decline is unknown but could be due to overall confusion and exhaustion among healthcare consumers in trying to navigate the landscape.

Preventive Care vs. Office Visits

Some patients are frustrated and confused when they seek preventive care (i.e., annual visit to a provider) but are billed and charged for an office visit.  This is a challenge, partially due to billing codes, and one that the state and federal governments may address in the future. 

To clarify, a preventive visit is to review your overall health, identify risks, and talk about staying healthy.  An office visit is time to discuss a specific health concern or condition.  Unfortunately, if a patient has a health issue, it’s nearly impossible to have a preventive visit without that conversation expanding into an office visit.  If this is a concern, patients should talk to their provider in advance to avoid confusion or unexpected charges.  

Defining Prevention

Preventive care is used to refer to routine screenings, tests, checkups, patient counseling and vaccines, which vary based on an individual’s risk factors and phase in life. Preventative screenings include2:

In addition to the list above from healthcare.gov discussion around family history, personal risks, physical assessment (weight, height, blood pressure, pulse, assessment of heart and lungs, visual assessment of ears, eyes, throat, skin, and abdomen), and routine screenings for cancer (breast, cervical and prostate) are typically included in your annual exam.3

These tests and general preventative services can help identify specific risk factors in an individual’s life that may lead to possible disease. Early identification and treatment can increase longevity or quality of life and avoid more costly procedures down the road.

Employer Focus on Prevention

Employers typically view preventative care as an opportunity to both reduce their medical costs as well as support employee wellness and productivity and should find ways to encourage the use of these services by their employees. Some simple campaigns that focus on educating their employee population about available in-network services and the importance of care when they are healthy can support this goal. Employers have also looked to develop wellness programs for the workplace to incent employees to make healthy lifestyle decisions as well as make those lifestyle choices more accessible. Some health plans also have incentives built in for activities like making your annual physical appointment or joining a gym.

The benefits to preventative care exist for everyone – employers will benefit from a healthier and more engaged workforce that leads to lesser claims costs, and employees can reduce health risks by acting before illness or disease can cause a significant impact on their lives.

As an employer, you should work with your third party administrator or carrier to understand how your population is doing against screening targets.  If you are falling short, or having returned to pre-pandemic levels it may be in the best interest of your employees to educate them on preventive care, share targets with them and perhaps build incentives for prevention.  This should go beyond medical to also look at dental and vision screenings, which are often a solid predictor of overall preventive health. Some of our clients, like the edHEALTH consortium, offer additional reporting, insights, and resources to support their educational institutions when it comes to promoting preventive care.

If you could use guidance around how to drive participation in preventive care within your population, the Spring team would be happy to help.

1 Healthy People 2030, Adults receiving recommended clinical preventive services, 2015-2020
2 https://www.healthcare.gov/preventive-care-adults/
3 Institutions who are self-insured have flexibility in offering benefits; however, the coverage provided in the Affordable Care Act provides a solid baseline.

We have all greeted our alarm clocks with disgust at times or been a bit overzealous with the snooze button, but what if your sleep pattern was so strained that every morning you and your alarm had a passive-aggressive standoff?  How long could you tolerate that lack of sleep before your work or personal life was negatively impacted, and what, if anything, could help you find more rest to be the best version of yourself? 

The National Safety Council (NSC) estimates that approximately 43% of workers are sleep-deprived, and that an overtired population is less productive, less present, and a potential safety risk. Organizations with safety sensitive positions or third shift workers have a greater risk, but all fatigued employees pose a greater risk to themselves and their employer than those that are well-rested. 

Similar statistics from The Centers for Disease Control and Prevention indicate that many American adults (35%) get inadequate sleep (defined as under seven hours); and they indicate that lack of sleep is associated with increased risks for cardiovascular disease, obesity, diabetes, hypertension, depression, and all-cause mortality. Employee burnout is another phenomenon that is exacerbated if sleep issues exist.  

As employers embrace the expansion of benefit offerings, sleep has entered the scene as a potential issue that needs addressing. Organizations are assessing how they can implement sleep education, tracking, and resolution for their employees with the goal of arriving at a more productive and healthier workforce.  Employee benefit offerings surrounding sleep include some or all of the following features:

Selecting the optimal solution for employees can be challenging, especially given that price points vary considerably, and employees are fatigued by all the available solutions.  The best place to start is by examining the data available to you and try to assess if undiagnosed sleep disorders are a pain point within your organization.  From there, consider how sleep support aligns with your overall wellness and well-being offering.  Education around sleep is a strong entry point to talk about self-care and mindfulness without the stigma that surrounds conversations around behavioral health and substance abuse.  Every one of us wants a better relationship with our alarm clock. Conveniently, many of the remedies for better sleep habits support better physical, emotional and psychological health as well.  Given this, sleep tracking might just be the next big employee perk.  Set your alarm, or you just might miss the trend.

Over the past five years, the outsourced vendor landscape has evolved related to the administration of the Americans with Disabilities Act (ADA).  Carriers and third-party administrators (TPA) who previously supported employers with leave compliance at the federal and state levels (i.e. FMLA, MA PFML, CT PFL, etc.) are now proficient in ADA and will support employers with their compliance requirements. 

Product offerings vary in the market, with some including support for leave as an accommodation exclusively and others providing support with all accommodations including leave.  The assistance available from vendor partners also differs, with some supporting the entire process end-to-end, including coordination of the interactive process with supervisors and employees, while others support data collection but leave the interactive process to supervisors, employees, and HR.  At this point, all carriers and TPAs agree that the ultimate decision on the accommodation rests exclusively with the employer, including evaluation of the potential hardship. 

Employers with minimal accommodation requests likely do not need support from an external partner.  For those employers, it is usually optimal to build some subject matter expertise internally within HR and funnel requests through that resource.  At a high level that process should include the following steps:

Although the supervisor is a critical part of the process, we typically recommend that supervisors do not independently manage the ADA process – especially if the volume of requests is small – as they may not understand the compliance requirements.  In addition, they often only have a view into their business unit or team, making it impossible for them to understand how the broader organization would define a hardship under the ADA as compared to their team or business unit. 

If the volume of accommodation requests is high or subject matter expertise does not exist in-house, leveraging your external provider may be a strong option.  By co-sourcing the ADA solution, you can leverage the expertise of the external vendor but leave decision-making to your team, including HR, supervisor and employee.  Key assessment of an ADA offering includes the following:

Regardless of the partner selected, employers can never fully outsource the accommodation process.  Although it often feels like a burden, returning accommodated employees to the workplace is in the best interest of everyone.  The ADA does not require that employers remove essential job functions, but it does ensure that disabled employees who are able to perform the essential functions of their job with an accommodation receive those legally required accommodations. 

If you need support with your accommodation process and compliance with ADA, free resources are available through the Job Accommodation Network (askjan.org) or feel free to reach out to our team for guidance.

As seen in the New England Employee Benefits Council (NEEBC)’s blog.

Paid Family and Medical Leave continues to evolve throughout New England and the country. While most of the activity has been at the state level, proposals have also been put forth federally. The programs passed by states vary in a number of ways, which leads to complexity for employers trying to navigate this landscape. Compliance concerns and complexities have also grown as the trend for remote work has continued, and employers that hire across the nation must comply with laws where employees work.

Massachusetts: Experience Over the Years

We have now completed our third year of the Massachusetts Paid Family and Medical (PFML) program! In those three years, the program has seen changes in contributions, benefits, claims experience, as well as changes to how it operates and coordinates with other benefits.

As shown in the summary below, the number of applications for the MA state PFML program has increased annually, as well as the number of approved claims. The most common reason for leave is own medical condition, while bonding with a new child is slightly lower in FY 2023 than FY 2022. Additional points of interest are shown below.

MA PFML Increases as of 1/1/24

The MA PFML weekly maximum benefit amount and contribution rate increased effective January 1, 2024.  The maximum weekly benefit is now $1,149.90, which is an increase of about $20 from the 2023 weekly maximum. For any employees who may have leave that runs from 2023 into 2024, the weekly benefit will be based on the beginning of the benefit year.

The total contribution is increasing from 0.63% to 0.88%, for employers with 25 or more covered individuals. The medical leave contribution will be 0.70%, with employers funding 0.42% and employees responsible for up to 0.28%. The family leave contribution will be 0.18%, with employers able to collect the total contribution from employees. Employers with less than 25 employees are not required to submit the employer portion of premium, so the effective total contribution rate is 0.46%.

The financial earnings requirement was also updated in 2024. Employees must have earned at least $6,300 and 30 times the PFML benefit amount during the last 4 completed calendar quarters to be considered eligible for MA PFML.

Additional Changes to MA PFML

Effective November 1, 2023, employees taking Paid Family and Medical Leave (PFML) in Massachusetts have the option to “top off” PFML benefits with available accrued paid leave (e.g., PTO, etc.) so the employee can receive up to 100% of their regular wages. This was not previously allowed for employers providing PFML through the state plan, however, was an option employers could allow through a private plan. The Department amended its FAQs in December clarifying employers can apply the terms of their company policies to the top up option.

Connecticut: A Year in Review  

Connecticut has now had PFML benefits available for 2 years. The program continues to grow, as shown in the summary below.

Based on the experience in the state in 2022 and 2023, Connecticut is not making any major changes to the program in 2024. The contribution rate will remain at 0.5% up to the social security wage contribution cap, which is increasing to $168,600 in 2024 ($160,200 in 2023). In addition, the CT minimum wage increases to $15.69 per hour in 2024, which correlates to an increase of about $40 for the maximum weekly benefit, now $941.90.

Connecticut’s Key Differences

The CT PFML program has some key differences when compared to MA PFML, such as the availability of leave for organ and bone marrow donation, as well as leave related to family violence. Differences in benefit amounts, leave duration, and eligibility conditions make it not directly comparable to MA PFML experience.

Rhode Island: Changes for 2024

Rhode Island established the first statutory disability program in the country in 1942, known as Rhode Island Temporary Disability Insurance (TDI). In 2014, they became the third state to offer family leave benefits through temporary caregiver insurance (TCI). The state does not allow private plans, making the model slightly different than other PFML programs in the region.

On January 1, 2024, a few updates to TDI and TCI became effective. The state’s taxable wage base increased to $87,000 in 2024, up from $84,000 in 2023. The contribution rate in 2024 is 1.2%, which is an increase of 0.1% from the previous two years.  The maximum weekly benefit is $1,043, not including the dependency allowance8, and the minimum weekly benefit is $130. 

The financial eligibility conditions claimants must meet increased. Employees must have paid contributions of at least $16,800 in the base period or meet the alternative conditions wherein they earned at least $2,800 in one of the base period quarters and base period taxable wages equal at least $5,600.

Rhode Island provides data on a weekly basis, which can be found on the State of Rhode Island Department of Labor and Training’s website.

New Hampshire: The First Year for the First Voluntary Program  

New Hampshire began paying benefits for the first Voluntary PFML Plan in the nation on January 1, 2023. New Hampshire employers can purchase coverage for 6 or 12 weeks through the state’s insurance carrier, MetLife, at any time. Employers may purchase coverage through other carriers, however the 50% Business Enterprise Tax (BET) Tax Credit will not apply. Individuals who are not covered by a NH PFML plan or equivalent plan may purchase individual plan coverage for 6 weeks. Individuals may only enroll during the open enrollment period, which is December 1, 2023, through January 29, 2024, for the 2024 plan year.

Premium amounts are determined through the underwriting and enrollment process but may not exceed $5 per week for individuals. No limit applies to employer premium.

The maximum weekly benefit for NH PFML is 60% of the Social Security wage cap ($168,600). Therefore, the maximum weekly benefit is $1,945.38 in 2024, an increase from $1,848.46 in 2023.

The state has not yet published 2023 claim data.

Other New England Updates

In addition to Massachusetts, Connecticut, Rhode Island, and New Hampshire, Vermont and Maine have evolving PFML programs.

Vermont launched their voluntary Family and Medical Leave Insurance (FMLI) program in 2023. Beginning on July 1, 2023, state employees were covered under the program. Other private and public employers with 2 or more employees can access the program on July 1, 2024, and small employers with one employee and individuals can purchase coverage for benefits beginning on July 1, 2025. Similar to New Hampshire, Vermont will offer 6 weeks of benefits at 60% of the Social Security wage cap. Cost will vary.

Maine officially created their Paid Family and Medical Leave program through the budget signed on July 11, 2023.  Rulemaking will launch in 2024, with contributions beginning January 1, 2025, and benefits becoming available on May 1, 2026. 

Are You Up to Speed?

Outside the region, California, Colorado, Delaware, Hawaii, Maryland, Minnesota, New Jersey, New York, Oregon, Washington, and the District of Columbia, as well as Puerto Rico, have mandatory paid family and medical leave and/or statutory disability insurance programs either in place or launching in upcoming years. As the PFML landscape continues to evolve at the local, state and federal level, policies need to be monitored on an ongoing basis.

PFML requirements are based on an employee’s work location. Employers should ensure they are compliant with the requirements of each individual leave program where they have employees working, and are aware of the differences by state. If any of your employees are subject to state PFML, you should review plans, policies, and processes to confirm they align with any legislative changes. To do so, the following checklist can be helpful:

If you need assistance ensuring PFML compliance or to assess the optimal plan set up for your organization, visit our Spring Consulting Group Paid Family and Medical Leave dashboard for additional information. 

The Problem

In the insurance, healthcare and benefits world, we have been helping clients challenged by things like inflation, hardened insurance markets, rising healthcare and prescription drug costs, remote and hybrid work, and other trends that continue to ebb and flow. On top of these dynamics, many consumers and organizations are beginning to open their eyes to the crisis that is long-term care in the U.S. The issues in this area became alarmingly obvious in the wake of the pandemic, and has continued to remain a top concern over the last several years. State Medicaid programs pick up significant long-term care costs and they are looking for ways to minimize these expenses.

Multiple studies show that 70% of Americans over the age of 65 will need Long-Term Care (LTC) at some point in their life, with the average duration being 3 to 4 years. The cost of an LTC stay is even more unaffordable than other components of healthcare in the U.S., with 2021 national annual averages as follows:

Long-Term Care insurance (LTCi) exists to prepare and provide a cushion for LTC needs.  With the LTC costs and expected use of the LTCi policy,  individual LTC is expensive. Forbes reported that the average LTCi cost for a male age 60 looking to purchase an LTC pool of $165,000 of coverage costs $1,200 a year. When we weave these factors into the aging population shift we’re experiencing, where the number of Americans aged 65 or older is expected to increase by 47% by 20501, we can see a huge problem on the not-so-distant horizon. Over the last 2 decades, the challenging environment has caused many LTCi carriers to exit the market, making coverage and pricing even more of an uphill battle.

Legislative Developments Driving New Entrants and Programs

Like with Paid Family and Medical Leave (PFML), states are starting to take things into their own hands regarding an LTCi funding solution, recognizing the dire situation for their constituents and the extensive drain LTC puts on publicly-funded programs like Medicare and Medicaid.

The State of Washington was the trendsetter in this area, passing its WA Cares program in 2022, key points of which include:

While Washington may be the first, many other states have LTC legislation on their docket. In 2019, California created a Long Term Care Insurance Task Force to explore the feasibility of developing and implementing a competent statewide insurance program for LTC services and support. To date, the Task Force has made the following recommendations for a more flexible program of that in WA:

The state of the California legislation is still in flux and it is uncertain when it will go into effect. In addition, some sort of LTCi plan is being or has been considered in over 10 other states including Connecticut, Colorado, North Carolina, Georgia, and Oregon. Legislation has been proposed in New York, Massachusetts, Pennsylvania, Minnesota, and Michigan, in addition to the two programs highlighted above.

While the maximum benefit payout (in the case of WA) will not be sufficient for most LTC needs, it is a step in the right direction, necessitating conversation and planning, and reducing some of the state’s burden. We do believe this trend will gain steam and momentum in the coming years. While some may be tempted to “wait and see,” we saw in Washington that many didn’t have time to secure a different option prior to the legal deadline and so were responsible for the tax. For this reason, we strongly advise our clients and their employees to review their LTC options now, while options still exist.

While state LTCi programs such as WA Cares revolve around an employee or employer tax, there is still administrative and compliance burden on employers to withhold, report, and submit those taxes. For these and other reasons, it may behoove employers to explore other options for employees either through a voluntary program or one partially sponsored by the employer.

Solutions in the Market

Luckily, long-term care insurance products have evolved from standalone LTC insurance to a hybrid program including life and LTC, or life and chronic illness riders. We also expect to see annuities becoming a bigger option in the future. Traditional medical insurance and long-term disability (LTD) typically will not cover much of anything related to LTC. More prevalent options include the following:

These solutions can be structured for groups (employer-paid or voluntary), executive carve-outs, or for individuals. Underwriting can come in the following formats: guaranteed issue, modified, or full.

Takeaways

For employers, LTC needs and insurance should be one piece of your reward and risk management strategy. We encourage companies to look at the LTCi realm and support employees where they can. A captive insurance model may provide a unique and cost-effective funding strategy. For individuals who already have an LTCi plan, you may want to consider “layering up” to ensure adequate coverage. Take a look at your duration limits, inflation riders, and other components. Regardless of your current position, a statutory LTC program could be coming to your state, and it’s best to be proactive in this area. Your broker/consultant should be equipped to help you navigate this complex landscape and provide solutions that make sense for your organization and its employees.

1 https://www.prb.org/resources/fact-sheet-aging-in-the-united-states/

Paid Family and Medical Leave continues to evolve throughout the country. While most of the activity has been at the state level, proposals have also been put forth federally. The programs passed by states vary in terms of covered workers, benefits paid, leave duration, funding, private plan availability and coordination with other leave programs. Variety across states leads to complexity for employers trying to navigate this landscape. Compliance concerns have also grown as the trend for remote work has continued, and as employers that hire across the nation must comply with laws where employees work.

A summary of changes to benefits and contributions in 2024 is below for each state program. Additional information can be found on Spring Consulting Group’s Paid Family and Medical Leave dashboard.

California

California’s Statutory Disability Insurance (SDI) law went into effect in 1946. In 2004, Paid Family Leave (PFL) requirements were added to the law, making it the first state to create a paid family leave program. In 2024, CA is increasing the contribution rate from 0.9% to 1.1%, which is fully paid by employees. Additionally, the SDI taxable wage maximum is eliminated, meaning all employee wages are subject to the SDI contribution requirement. This change does not apply to voluntary plans. The maximum weekly benefit will remain at $1,620.

Colorado

The Colorado Family and Medical Leave Insurance Program (FAMLI) officially begins paying benefits on January 1, 2024, after 1 year of collecting contributions. The contribution rate will remain at 0.9% of wages, however, Social Security wage limit is increasing to $168,600. Employees are responsible for up to 50% of the total contribution. In 2024, the maximum weekly benefit is $1,100.

Connecticut

The state began collecting contributions on January 1, 2021 and benefits became available one year later in 2022. Based on the experience in the state in 2022 and 2023, Connecticut is not making any major changes to the program in 2024. The contribution rate will remain at 0.5% up to the Social Security wage contribution cap, which is increasing to $168,600 in 2024 ($160,200 in 2023). In addition, the CT minimum wage increases to $15.69 per hour in 2024, which correlates to an increase of about $40 for the maximum weekly benefit, now $941.90. 

Delaware

The Delaware Paid Family and Medical Leave Insurance program was signed into law on May 11, 2022. The state has been developing rules and regulations prior to contributions beginning on January 1, 2025 and benefits become available on January 1, 2026.

The state was the first to provide an opportunity for employers with comparable leave programs to opt-out of the Delaware Paid Leave and grandfather their employer plan for up to five years. Employers had to submit applications by January 1, 2024. Additionally, employers who are interested in applying for private plans under Delaware PFML will be able to do so beginning in September of 2024.

Hawaii

Hawaii enacted the Temporary Disability Insurance (TDI) law in 1969 and remains the last state (other than Puerto Rico) to not add paid family leave provisions to their statutory disability program. 

In 2024, the maximum weekly benefit will increase by $33 to $798. The total contribution rate will vary by employer, however, employers can collect up to 0.5% of the maximum weekly wage base from employees, which equates to $6.87 per week. The maximum weekly wage base in 2024 is $1,374.78.

Maine

Maine officially created their Paid Family and Medical Leave program through the budget signed on July 11, 2023. Rulemaking will launch in 2024, with contributions beginning January 1, 2025, and benefits becoming available on May 1, 2026. 

Maryland

Maryland will begin collecting contributions on October 1, 2024, and begin paying benefits on January 1, 2026. The total contribution rate will be 0.90%. Employers can collect up to 0.45% from employees and are responsible for funding at least 0.45%. However, employers with less than 15 employees are not required to contribute the employer portion of the premium. Additionally, employers interested in applying for a private plan will be able to do so this fall.

Massachusetts

Massachusetts Paid Family and Medical Leave (PFML) began paying benefits for medical leave, bonding, and military reasons on January 1, 2021 after collecting contributions for 15 months. Leave to care for a family member began on July 1, 2021. After three years of experience, Massachusetts will be increasing the weekly maximum benefit amount and the contribution rate, effective January 1, 2024.  

The maximum weekly benefit is now $1,149.90, which is an increase of about $20 from the 2023 weekly maximum. For any employees who may have leave that runs from 2023 into 2024, the weekly benefit will be based on the beginning of the benefit year.

The total contribution is increasing from 0.63% to 0.88%, for employers with 25 or more covered individuals. The medical leave contribution will be 0.70%, with employers funding 0.42% and employees responsible for up to 0.28%. The family leave contribution will be 0.18%, with employers able to collect the total contribution from employees. Employers with less than 25 employees are not required to submit the employer portion of premium, so the effective total contribution rate is 0.46%.

The financial earnings requirement was also updated in 2024. Employees must have earned at least $6,300 and 30 times the PFML benefit amount during the last 4 completed calendar quarters to be considered eligible for MA PFML.

Minnesota

Minnesota is working to develop the rules for PFML. Contributions and benefits are set to begin at the same time on January 1, 2026, which would mean they are one of the only states to not pre-fund a PFML program in recent years. The contribution rate will be 0.7%, with employers funding at least 50%. Beginning in 2024, most employers will be required to submit a report detailing quarterly wages and hours worked for each employee.

New Hampshire

New Hampshire began paying benefits for the first Voluntary PFML Plan in the nation on January 1, 2023. New Hampshire employers can purchase coverage for six or 12 weeks through the state’s insurance carrier, MetLife, at any time. Employers may purchase coverage through other carriers; however the 50% Business Enterprise Tax (BET) Tax Credit will not apply. Individuals who are not covered by a NH PFML plan or equivalent plan may purchase individual plan coverage for six weeks. Individuals may only enroll during the open enrollment period, which is December 1, 2023, through January 29, 2024, for the 2024 plan year.

Premium amounts are determined through the underwriting and enrollment processbut may not exceed $5 per week for individuals. No limit applies to employer premiums.

The maximum weekly benefit for NH PFML is 60% of the Social Security wage cap ($168,600). The maximum weekly benefit is, therefore, $1,945.38 in 2024, an increase from $1,848.46 in 2023.

New Jersey

New Jersey was the third state to create a statutory disability insurance program when the Temporary Disability Benefits (TDB) law went into effect in 1948. In 2008, the state added Family Leave Insurance (FLI).

In 2024, the contribution rate and maximum weekly benefit will increase. The contribution rate will be 0.09%, up from 0.06% in 2023. The taxable wage base for employees will be $161,400. FLI is fully funded by employees. For TDI, employers pay a specific rate between 0.10% and 0.75%, up to the taxable wage base for employers of $42,300. Like in 2023, employees will not contribute towards TDI in 2024.

Earnings requirements have also increased. To qualify for NJ TDB and FLI in 2024, employees must have worked 20 weeks earning at least $283 per week or have earned $14,200 in the base year.

New York

New York Disability Benefits Law (DBL) went into effect in 1949. Paid Family Leave (PFL) was later introduced in 2018. In 2024 the contribution will decrease to 0.373%, from 0.455% in 2023. The rate will apply to wages up to the state average weekly wage of $1,718.15, and is fully funded by employee contributions. The maximum weekly benefit is also increasing to $1,151.16.

Oregon

Oregon benefits began paying on September 3, 2023, after collecting contributions for about 8 months, since the beginning of 2023. Effective January 1, 2024, the contribution rate will increase to 1%, up to the social security taxable wage maximum of $168,600. Employers can collect up to 60% of the total premium from employees. The maximum weekly benefit will remain at $1,523.63 and the minimum weekly benefit will be $63.49.

Puerto Rico

Puerto Rico launched their Non-Occupational Temporary Disability Insurance program, El Seguro por Incapacidad No Ocupacional Temporal (SINOT), in 1968. No paid family leave benefits have been added to date. In 2024, the maximum weekly benefit will remain at $113 ($55 maximum for agricultural workers) and the minimum weekly benefit will remain at $12. No change to the 0.6% contribution rate (up to $9,000 of earnings) has been announced for 2024. Employers may deduct up to 0.3% from employees.

Vermont

Vermont launched their voluntary Family and Medical Leave Insurance (FMLI) program in 2023. Beginning on July 1, 2023, state employees were covered under the program. Other private and public employers with 2 or more employees can access the program on July 1, 2024, and small employers with one employee and individuals can purchase coverage for benefits beginning on July 1, 2025. Similarly to New Hampshire, Vermont will offer 6 weeks of benefits at 60% of the Social Security wage cap. Cost will vary.

Rhode Island

Rhode Island established the first statutory disability program in the country in 1942, known as Rhode Island Temporary Disability Insurance (TDI). In 2014, they became the third state to offer family leave benefits through temporary caregiver insurance (TCI). The state does not allow private plans, making the model slightly different than other PFML programs in the region.

On January 1, 2024, a few updates to TDI and TCI became effective. The state’s taxable wage base increased to $87,000 from $84,000 in 2023. The contribution rate in 2024 is 1.2%, which is an increase of 0.1% from the previous two years.  The maximum weekly benefit is $1,043, not including the dependency allowance1, and the minimum weekly benefit is $130. 

The financial eligibility conditions claimants must meet increased so that employees must have paid at least $16,800 in the base period or meet the alternative conditions wherein they earned at least $2,800 in one of the base period quarters and base period taxable wages equal at least $5,600.

Washington

Washington began paying on January 1, 2020, after collecting contributions for a year. Effective January 1, 2024, the PFML contribution rate will decrease to 0.74% of an employee’s wage, up to the Social Security taxable wage maximum of $168,600. Employers must fund at least 28.57% and employees will contribute up to 71.43%. The maximum weekly benefit will increase to $1,456 per week.

Washington, D.C.

D.C. Paid Leave benefits began on July 1, 2020, and they had collected contributions since July 1, 2019. Effective October 1, 2023, the District released an updated Notice to Employees, which included an increased maximum weekly benefit, from $1,049 previously, to $1,118. No change has been announced to the 0.26% contribution rate, which is fully employer-funded.

What’s Next?

As the PFML landscape continues to evolve at the local, state, and federal levels, policies need to be monitored on an ongoing basis.

If you need assistance ensuring PFML compliance or to assess the optimal plan set up for your organization, Spring’s consultants are happy to help.

All information is subject to change.

1 Dependency allowance provides the greater of $10 or 7% of the benefit rate for up to 5 dependents