Scott and Sununu release information from insurers on family leave plan

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Scott and Sununu release information from insurers on family leave plan

Fri, 03/15/2019 - 11:35am -- tim

Vermont Business Magazine Governor Phil Scott’s and Governor Chris Sununu’s administrations have released the responses Vermont and New Hampshire received to their joint request for information (RFI) on administering and insuring the Twin State Voluntary Leave Plan, a bi-state voluntary paid family and medical leave program. The Legislature is currently working on a mandatory family leave plan. Last year, Governor Scott vetoed a mandatory plan supported by a payroll tax. Since then he and Sununu have developed a voluntary plan backed by the weight of about 18,500 twin state government employees and paid for with premiums.

“We appreciate all the feedback we received from insurance carriers, which clearly demonstrate the merit of our approach,” said Governor Phil Scott. “Our goal in developing this initiative and working with our respective legislatures has been to establish a voluntary paid family leave program that is solvent, efficient with respect to administrative costs, affordable to workers, and balances policy goals with the expertise of the public and private sectors. The responses we received from the RFI indicate we are on the right track to meeting those objectives.”.

“We are pleased with the high-level interest from these insurers, and our state experts will continue to review these RFI’s,” said Governor Chris Sununu. “There is no question that the Twin State Voluntary Leave Plan will be viable and financially sustainable – without an income tax.”

Vermont and New Hampshire have preliminarily reviewed the RFI responses and plan to meet individually with the respondents in the coming weeks to discuss a uniform set of questions.

The following are some of the initial takeaways from the RFI responses: 

  • Interest: First and foremost, the RFI responses demonstrate considerable interest from insurance carriers to work with New Hampshire and Vermont to implement the Twin State Voluntary Leave Plan.
  • Experience: The size, quality, and experience of the interested carriers is also encouraging. All carriers had extensive experience administering employment-based insurance benefits, and a number had specific experience administering paid family leave insurance in connection with state programs in New York, New Jersey, and California. 
  • Strength: The six carriers combined provide insurance and other financial services to over 160 million individuals world-wide, hold over $2.2 trillion in assets, and on average have been in business for over 140 years. In addition, each of the carriers receives strong credit ratings from AM Best, S&P, Moody’s and Fitch.
  • Timeliness: Because the carriers are in the business of insurance, they are already adequately capitalized to provide the coverage; their RFI responses reflected an ability to begin administering the program shortly after premiums began being paid.    
  • Cost: The RFI responses that contained pricing specifications confirmed initial conversations regarding the cost of the program, with average estimates ranging from the about $200-$285 per employee, per year. These estimates were based on the roughly 18,500 employee pool in the combined New Hampshire and Vermont State workforces. 

A press release issued Friday morning stated that New Hampshire and Vermont administrations are encouraged by the responses and will engage with the respondents over the next two weeks to further distill the information received. This process will help refine the Twin State Voluntary Leave Plan in advance of drafting a Request for Proposals - all with the aim of providing the strongest and most cost-efficient program possible.

As outlined in their joint announcement January 16, 2019, the governors’ plan creates an insurance product that is not currently offered in either state. It will be available to all businesses, as well as individuals, and will be anchored by the state employee workforce of both states - a combined 18,500 employees. The cost would be borne by businesses or individuals as premiums.

Under the Governors’ proposal, the new insurance coverage would provide enrolled public and private sector employees 60 percent wage replacement for six weeks at competitive rates for qualifying events, including:

  • 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;
  • A serious health condition that makes the employee unable to perform the essential functions of his or her job; 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).

The two states would select an insurance carrier, or carriers, through a coordinated Request for Proposal (RFP) process to assume the risk and manage the benefit and claims under the plan. This carrier, or these carriers, would then develop a “State Rate.” This is the per employee cost that each state would pay to provide a Family Medical Leave Insurance (FMLI) plan to its employees.

Under the joint-proposal, each state would cover the full costs of providing an FMLI benefit to its employees, and employees will not have to incur any additional cost for the product. In addition, the winning carrier(s) would be required to allow all private sector employers in the state to opt-in to the FMLI plan with specified rates for the following categories of employer:

  • Employers that have 100 percent employee participation and have 20 employees or more would receive the State Rate;
  • Employers that have 100 percent employee participation and have fewer than 20 employees would receive a small employer rate which is expected to be modestly higher than the State Rate; or
  • Employers that have less than 100 percent employee participation would receive a scaled rate that would depend on their participation rate and whether they had 20 employees or more.

Additionally, individuals whose employer does not offer a paid leave plan will have the option of purchasing coverage.

Click here for more information on the proposed plan. 

Click here to read more about the Request for Information issued to insurance carriers

To view the RFIs, click on list below:

Source: Governor Scott 3.15.2019