By Roni Karnis
New Hampshire workers now have access to a new, unique employment benefit known as Paid Family and Medical Leave (PFML) insurance. PFML insurance provides wage replacement benefits for family and medical leave. The Granite State Paid Family Leave Plan was enacted by HB2 in June 2021. It is codified in RSA 21-I:99, et seq., RSA 282-B and RSA 77-E:3-e and supplemented by administrative rules, Ins 8000 (adopted on Nov. 20, 2022). The law required the program to be operational by January 1, 2023. The Departments of Administrative Services and Employment Security oversee the program, while the Insurance Department approves the insurance forms and rates.
The program helps address two employment issues that have been persistent in the labor market for some time. For employers, the issue is attracting and retaining workers while maintaining workplace stability and productivity. For employees, there has been a growing concern nationally to be able to take care of their families when serious health problems arise and to bond with children after childbirth or adoption. No doubt, the pandemic escalated both concerns.
The federal Family and Medical Leave Act of 1993 (FMLA/Act) guarantees certain employees who work for large employers up to 12 weeks leave of absence for qualifying events. The Act, however, does not apply to all employment situations, particularly in New Hampshire where many employers are not subject to FMLA. The Act also does not mandate payment of wages while on leave and many families cannot afford to take leave without pay.
To address the challenges unaddressed by federal law, some states, including MA and CT, have enacted statutes requiring employers to participate in a state regulated PFML program, which is typically funded through employment taxes. Vermont announced a program resembling NH’s last December.
Unlike other states, the Granite State Plan is a voluntary program and does not involve an increase in employment tax revenue. Instead, the program creates a viable market with an advantageously priced PFML insurance product for all New Hampshire employers and workers to access if they choose. New Hampshire accomplished this by 1) combining the contract for PFML insurance for state employees with a contract to make the same coverage available statewide, 2) acting as a premium aggregator for small employers and an individual risk pool, and 3) offering a Business Enterprise Tax (BET) credit for employers that elect to sponsor and pay all or part of the premium for employees. In July 2022, the State contracted with Metropolitan Life Insurance Company (MetLife), a carrier with extensive PFML experience, to provide the insurance and plan administration.
Every New Hampshire employer, regardless of size, now has the option to include PFML coverage in its benefits package, much like health, disability, accident, and cancer-only coverage offerings. Having this unique coverage in their benefit profile can help New Hampshire employers stay competitive in the labor market. As an incentive to participate and decrease the cost, RSA 77-E:3-e extends a BET credit to a sponsoring employer “in an amount equal to 50 percent of the premium paid.” The tax credit applies not to the total premium cost, but rather to that portion of the PFML premium paid by the employer.
If an employer chooses not to sponsor the benefit, an employee can purchase PFML coverage through the State individual risk pool, which MetLife administers on behalf of the Department of Employment Security. Only individuals whose employer does not offer PFML insurance, or an equivalent benefit, may purchase coverage through the State. Individuals are responsible for paying the premium, which is capped at $5 per week. MetLife collects premium directly from individuals unless the person works for an employer with 50 or more employees. In that case, the employer is required to deduct the premium from the worker’s paycheck with remittance to MetLife.
PFML insurance provides wage replacement benefits in the event of an absence from work due to a qualifying event during a 12-month benefit period. RSA 21-I:102, III and Ins 8001.03 set minimum benefits at six weeks leave with payment of 60 percent of the employee’s average weekly wage (up to the Social Security wage cap). Leave may be continuous or on an intermittent basis. While MetLife also offers employer groups a policy providing 12 weeks of benefits, individual coverage is limited to six weeks. For employer groups, a waiting period of up to seven months, during which there is payment of premium but no benefits yet available, is permitted. An employer may also elect to have an elimination period of up to one week. Employers may use these plan elements to customize their benefit structure. Individuals purchasing insurance through the State are subject to both a seven-month waiting period and one week elimination period.
There are differences between the Granite State Plan and FMLA. One such difference is the definition of family member. For example, state law includes grandparents, whereas FMLA does not. Additionally, because this is a voluntary program intended to create a viable insurance market, the insurance regulations permit flexibility in policy design to meet consumer demand and foster competition. Pursuant to Ins 8001.02(n), an insurer may include other relatives, such as a sibling or cousin, within the definition, so long as this is reflected in the policy language.
As with other regulated insurance, there are exclusions. (See Ins 8001.05) PFML insurance is prohibited from providing benefits for the employee’s own medical leave that arises from a work-related illness or injury or their own disability for which they receive disability income benefits.
Also noteworthy, an employer’s decision to grant leave from work does not guarantee benefits under a policy. Nor does the granting of benefits necessarily guarantee any right to continued employment or job protection. The fact that an insured may be terminated for taking an otherwise qualifying leave of absence is not grounds for denying benefits under the policy. Labor and employment practitioners should be aware, however, of the new state family and medical leave job protections afforded employees that work for large employers (50 or more employees) that sponsor PFML insurance and how it compares to FMLA. (See RSA 275:37-d)
Businesses began enrolling in December and may enroll at any time throughout the year. The individual pool enrollment began January 1, 2023. More information about the program is available at paidfamilymedicalleave.nh.gov.
Roni Karnis is an attorney at the Insurance Department, working in the areas of life, annuity, and ancillary health, and presides over administrative hearings when appointed. She also serves as Secretary on the Family and Medical Leave Insurance Advisory Board.