Governor Sununu, Senator Bradley Announce New Voluntary Paid Leave Legislation
Concord, NH – Today, Governor Chris Sununu and Senator Jeb Bradley announced new voluntary paid leave legislation that, if enacted, will empower individuals and businesses to make the voluntary choice to opt-in. This legislation addresses the legislature's concerns about the paid leave legislation proposed by Governor Sununu last year while also addressing the Governor's concerns regarding the use of an income tax to fund the legislature's proposed program.
"I support paid family leave and have a plan to get it done," said Governor Chris Sununu. "Instead of government mandates that would impose an income tax, this is a truly voluntary, innovative plan that would deliver for New Hampshire families. I urge the legislature to support this voluntary paid leave plan, because it's the best shot at providing a paid leave plan that does not have administrative barriers or burdens, is available to all who want it, and is forced upon no one who does not."
"The New Hampshire Insurance Department feels that the Governor has addressed two very important concerns that were brought up by the legislators and the carriers," said Commissioner John Elias. "This proposal decreases the impact of adverse selection in the individual opt in group, and it increases the subsidization of premium to make the benefit affordable for all employees."
"The voluntary paid family and medical leave program that I filed is a compromise plan that supports Granite State families and does not put taxpayers on the hook with an income tax," said Senator Jeb Bradley (R-Wolfeboro). "The compromise plan gives family members the flexibility to care for a loved one when they are needed most without interfering in the employer and employee relationship. I am pleased that Governor Sununu has led on this issue and that we have been able to build a model that works for New Hampshire."
The New Hampshire Insurance Department helped with the original design of the Granite State Paid Family Medical Leave Plan, facilitated the RFP process and met with each of the carriers that participated in the process. The carriers expressed some concerns around adverse selection and affordability with the original plan, and Governor Sununu and the Insurance Department have proposed solutions to improve the plan. With these solutions in place, the plan is more appealing to carriers and more valuable to the consumers.
Addressing Potential Adverse Selection:
Through the RFI process, the carriers raised an issue that the individual opt-in group may experience adverse selection. This sentiment was expressed by legislative leaders when they removed the Governor's plan from the State Budget. This revised new plan includes several items that will address the issue of adverse selection in the individual opt in group:
- The open enrollment for the individual opt-in group will be limited to once a year and will last two months.
- The rating will not be grouped with the state employees or other employers of the state, and it will be based on the claims experience of the group.
- There will be a seven month vestment period, to allow the program to become capitalized.
Some carriers and the legislators expressed concerns about the affordability of the rates for the individual opt in group, as well as all other employers. This new plan includes several items that address those concerns:
- Carriers indicated that 75% of costs associated with paid family medical leave are tied to the disability portion of the coverage. Since most New Hampshire employees have short term disability benefits, this was deemed to be duplicative coverage. This proposal addresses that.
- This plans creates a business enterprise tax credit that will be used to incentivize participation driving down premiums. 50% of the premium that an employer pays for FMLI coverage can be claimed as a credit against the BET.
- Premiums for the individual opt in group will be stabilized by a Premium Stabilization Reserve Fund. This model is based on the state's successful Medicaid Expansion program, where the portion of insurance premium tax derived from plans offered under Granite Advantage program are used to pay the non-federal share this mechanism will limit the weekly premium for individuals in this group to $5 or less per pay week.