Brian Bouchard | August 16, 2021
The COVID-19 pandemic foisted paid leave into the public conversation. Federal programs like the Families First Coronavirus Response Act (FFCRA) mandated periods of paid leave—short and long—for qualifying employees and offset the expense on businesses with a payroll tax credit. The FFCRA has largely been viewed as a success: both in terms of stemming the tide of the pandemic and keeping the heads of many employees who needed medical leave above water.
Since the FFCRA expired last December, many states have debated enacting permanent paid leave programs. These programs have historically been mandatory; meaning that qualifying employers were obligated to offer paid leave as a benefit to qualifying employees. New Hampshire—in an attempt to balance the benefits of paid leave programs like the FFCRA with our State’s more laissez-faire policy instincts—has adopted a first in the nation voluntary paid leave program for companies and individuals alike. Here’s how it works.
The Program. The program uses a combination of insurance, known as family medical leave insurance (FMLI), and tax credits. Using state employees as a risk pool (of which there are approximately 10,000), the State Insurance Department will solicit bids for FMLI and will select an insurance partner to provide paid leave benefits under the plan. Employers and/or individuals will then pay insurance premiums on the FMLI in the event family or medical leave is needed while an individual is insured.
Employers that participate in the plan (again, voluntarily) may offset the cost of insurance premiums through business tax credits. This is intended to encourage employer participation, which itself will diversify the risk pool and ideally result in lower premiums.
Program Benefits. The FMLI program provides six weeks of wage replacement at 60% of an employee’s average weekly wage. What qualifies as an “average weekly wage” will be spelled out in forthcoming regulations but it will likely involve looking at an employee’s earnings for a specified period before leave is taken.
Eligibility. All Granite state businesses, regardless of size, are eligible to participate in the new voluntary paid leave program. This is a departure from the FMLA which applies to businesses with only 50 or more employees.
Individuals can participate as well regardless of whether their company participates in the New Hampshire voluntary program. The individual option also appears to apply to independent contractors and sole-proprietors, but regulations will need to confirm who qualifies as an individual and whether the paid leave benefit is limited to employees of companies. One caveat to the individual option (or companies who participate with fewer than 50 employees) is that the employee’s leave—while paid—may not be protected. This means that an employee returning from leave may not be guaranteed reinstatement into their former position or an equivalent position. Job protected leave applies only if elements of the FMLA are satisfied, including working for a company with 50 or more employees.
Cost to Employers/ Individuals. To participate in the program, employers with more than 50 employees will contract directly with the selected insurance provider. Everyone else (including smaller companies and individuals) will pay insurance premiums to the State of New Hampshire. Premiums for individual coverage will not exceed $5 per subscriber per week. Individuals programs will have a mandatory 7-month waiting period and a 60-day annual open enrollment period.
Interestingly, unlike other paid leave programs, employers are not required to pay 100% of the premiums. Employers and employees may split the cost at any ratio. This is an attractive feature for smaller companies that wish to provide paid leave but cannot afford the full premium cost.
New Hampshire’s FMLI program is not ready for prime time yet. Responses to the State’s RFPs are due March 31, 2022. The expectation is that FMLI coverage will be available by January 1, 2023. Until then, employers should look at their financial records and identify where, from a budget perspective, they may be able to participate and offer this attractive benefit to current and prospective employees.
This article was originally published by The Chamber Collaborative of Greater Portsmouth and can be found here.