In January 2023, New Hampshire will launch its unique Paid Family and Medical Leave Plan, joining 12 other states and the District of Columbia with laws that expand access to this benefit. While many of those states use a public social insurance model to provide paid leave, New Hampshire is one of a growing number turning to private insurance to administer the benefit. Unique even among private models, the state is contracting with a single private insurer to establish a voluntary family and medical insurance (FMLI) benefit for state government and private-sector workers. This new development highlights another creative option to grow access to paid family and medical leave.
Existing Private Insurance Approaches
In 2016, New York established a mandatory statewide program that requires businesses to purchase insurance either from a state fund or a private insurer, with the state government strictly regulating benefit levels, coverage, and premium rates. Virginia enacted a law in 2022 that establishes paid family leave as a class of private insurance. As a result, employers can voluntarily participate in plans that are entirely designed and administered by private insurers.
New Hampshire’s Paid Family Leave Plan
New Hampshire’s new law is distinct from both New York’s and Virginia’s. Unlike in New York, New Hampshire’s paid leave system is optional, and unlike Virginia, New Hampshire will play a central role in establishing that insurance market.1 Following a request for proposal (RFP) authorized by the law, New Hampshire contracted with a single private insurer – MetLife Insurance – to administer a voluntary paid family and medical leave base plan starting on January 1, 2023. FMLI will function like traditional insurance plans, as employers and/or individual employees that opt-in will pay a premium to insure against the event that they must take time off work for a qualifying event. In return, under the base plan, workers will receive up to six weeks of benefits that replace 60% of wages. Weekly benefits will be capped at 60% of the Social Security Taxable Maximum ($147,000 in 2022 – or $2,830 per week), allowing for a maximum weekly benefit of about $1,700 per worker.
Qualifying events included in MetLife FMLI Plans:
- A personal serious health condition when disability coverage does not apply, including childbirth;
- The birth of a child and to care for the newborn child within one year of birth;
- The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
- Caring for the employee’s spouse, child, or parent who has a serious health condition; or
- Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty,” or to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).
New Hampshire is also using its own state government workforce to establish a risk pool for the program, which will determine premium rates paid by private employers. In particular, the state is purchasing base plan coverage for all 10,000 state government employees (at no cost to the workers) starting on January 1st, 2023. By providing coverage to a large and diverse group of workers, New Hampshire is hoping to keep premium rates low.
The law also includes various incentives for private-sector employers to participate, including allowing employers to establish premium cost sharing with employees. In addition, New Hampshire is creating a new business tax credit that covers 50% of the employer’s portion of the premium for up to six weeks of benefits.
Additionally, the law requires MetLife to offer coverage to individuals whose employers choose not to participate in the base plan or provide a similar benefit. The law caps individual plan premiums at $5 per week and establishes an FMLI Stabilization Fund that ensures individual premiums remain stable from year to year and do not exceed the $5 weekly maximum. The FMLI Stabilization Fund will be funded through a tax on the premium revenue Met Life generates from FMLI.
New Hampshire also allows other private insurers to offer alternative paid family and medical leave plans to compete with MetLife’s base plan. For example, MetLife itself is offering a more generous 12-week group plan with benefits ranging from 60% to 100% wage replacement. However, for firms that choose MetLife’s 12-week plan, the new 50% premium tax credit will not increase to reflect the higher cost associated with the more generous plan and instead will be calculated based on the cost of the six-week plan. Additionally, employers will not be able apply the tax credit toward insurance plans provided by other carriers.
While FMLI benefits in New Hampshire will run concurrently with the Family and Medical Leave’s Act’s (FMLA) 12 weeks of unpaid, job protected leave, it will not expand job protection in the state. As a result, it is possible that some workers in New Hampshire may be eligible for paid leave benefits without job protection.
New Hampshire should consider two additional steps to ensure the law’s success. First, to increase utilization, the state should work to raise awareness among employers and employees. Second, the state should collect data to understand the impact of FMLI during its first year as the plan will be up for renewal in the next biennial budget.
New Hampshire’s innovative approach is designed to expand access to paid family leave in the state at a critical time. According to a recent BPC-Morning Consult poll, over half of the mothers in the workforce (51%) feel less financially secure today than they did before the pandemic, and they state that paid family leave would increase their financial security (53%) and help them continue to work (53%). New Hampshire’s new program will model another approach to expand access to the benefit.
1 Of note, New Hampshire’s paid family and medical leave benefits are administered and overseen by a combination of state agencies, including the Insurance Department, Department of Employment Security, and Department of Administrative Services.
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