Transcription
Session 29, Absence Management and Paid Family Leave PlansSOA Antitrust DisclaimerSOA Presentation Disclaimer
2019 Health MeetingJONATHAN KEMP, MBATHOMAS A. TIPTON, FSA, CERA, MAAASUN LIFE FINANCIALTHE HARTFORDSession 029: Absence Management and Paid Family andMedical Leave PlansJune 24, 2019
SOCIETY OF ACTUARIESAntitrust Compliance GuidelinesActive participation in the Society of Actuaries is an important aspect of membership. While the positive contributions of professional societies and associations arewell-recognized and encouraged, association activities are vulnerable to close antitrust scrutiny. By their very nature, associations bring together industry competitorsand other market participants.The United States antitrust laws aim to protect consumers by preserving the free economy and prohibiting anti-competitive business practices; they promotecompetition. There are both state and federal antitrust laws, although state antitrust laws closely follow federal law. The Sherman Act, is the primary U.S. antitrust lawpertaining to association activities. The Sherman Act prohibits every contract, combination or conspiracy that places an unreasonable restraint on trade. There are,however, some activities that are illegal under all circumstances, such as price fixing, market allocation and collusive bidding.There is no safe harbor under the antitrust law for professional association activities. Therefore, association meeting participants should refrain from discussing anyactivity that could potentially be construed as having an anti-competitive effect. Discussions relating to product or service pricing, market allocations, membershiprestrictions, product standardization or other conditions on trade could arguably be perceived as a restraint on trade and may expose the SOA and its members toantitrust enforcement procedures.While participating in all SOA in person meetings, webinars, teleconferences or side discussions, you should avoid discussing competitively sensitive information withcompetitors and follow these guidelines: Do not discuss prices for services or products or anything else that might affect prices Do not discuss what you or other entities plan to do in a particular geographic or product markets or with particular customers. Do not speak on behalf of the SOA or any of its committees unless specifically authorized to do so. Do leave a meeting where any anticompetitive pricing or market allocation discussion occurs. Do alert SOA staff and/or legal counsel to any concerning discussions Do consult with legal counsel before raising any matter or making a statement that may involve competitively sensitive information.Adherence to these guidelines involves not only avoidance of antitrust violations, but avoidance of behavior which might be so construed. These guidelines onlyprovide an overview of prohibited activities. SOA legal counsel reviews meeting agenda and materials as deemed appropriate and any discussion that departs from theformal agenda should be scrutinized carefully. Antitrust compliance is everyone’s responsibility; however, please seek legal counsel if you have any questions orconcerns.2
Presentation DisclaimerPresentations are intended for educational purposes only and do not replaceindependent professional judgment. Statements of fact and opinions expressed arethose of the participants individually and, unless expressly stated to the contrary,are not the opinion or position of the Society of Actuaries, its cosponsors or itscommittees. The Society of Actuaries does not endorse or approve, and assumes noresponsibility for, the content, accuracy or completeness of the informationpresented. Attendees should note that the sessions are audio-recorded and may bepublished in various media, including print, audio and video formats without furthernotice.3
Timeline: Paid Family Leave in the US2004California2009New Jersey2014Rhode Island2018New York2020WashingtonFederal Proposal ? 2021MassachusettsWashington D.C.PFL studies performed in other statesPFL programs implemented in local municipalities4
Differences in Paid Family Leave PlansCANJRINYMAWAMax Leave in ayear6 weeks6 weeks4 weeks8-12 weeks12 weeks12 weeksIncomeReplacement 60%66.7% 60%50-67%Up to 80%Up to 90%MaximumWeekly BenefitAmountApproximately100% ofSAWW53% of SAWW( 633 in 2018)85% of SAWW( 852 in 2018)50% of SAWW( 653 in 2018) 850 initially64% of SAWWthereafter 1,000 initially90% of SAWWthereafterJob ProtectionNoNoYesNoYesYesWaiting PeriodNone7 days7 daysNone7 days (nonefor bonding)7 days (none forbonding)NoNoNoNoYesYesEmployeeEmployee /employerEmployeeEmployeeEmployeeEmployee /employerIntermittentLeavesFunded By5
States with Disability Insurance ProgramsMaximum BenefitPeriodIncomeReplacementMaximum WeeklyBenefit AmountFunded by CANJRINYHIPR52 weeks26 weeks30 weeks26 weeks26 weeks26 weeks55%66.7% 60%50%58%65% 1,173 633 831 170 594 113EmployeeEmployer /employeeEmployeeEmployeeEmployer /employeeEmployer /employeeMassachusetts and Washington leave programs will feature paid medical leave- Care for own serious health conditions- Up to 20 weeks (Massachusetts) and 12-14 weeks (Washington)- Same benefit structure as paid family leave6
Absence and Paid Family & Medical LeaveProduct evolutionand Client needsJonathan KempAssociate Director, Product ManagementSun Life Financial
Linear leave management modelsIntegrated Disability ManagementTotal Absence ManagementHealth and Productivity Management8
Branching leave management modelAbsenceManagementHealthcare CostIntegration withHealth Insurance andHealth AnalyticsHRIS FocusIntegration with timeand attendancesoftwareRegulatory FocusStatutory Disabilityand PFML9
DefinitionsStatutory DisabilityLegacy State mandated Disability Programs (NY, CA,NJ, RI, HI)Paid Medical Leave (PML)A new variation (starting with Massachusetts and Washington) of Disability product utilizing FMLAterminology and concepts for the employees own Serious health conditionPaid Family Leave (PFL)A Paid leave product that provides Salary replacement for employees to Bond with a newborn ornewly adopted child; care for a Seriously Ill family member, or for a Military ExigencyPaid Family and Medical Leave (PFML)A combined Paid Medical Leave and Paid Family Leave ProgramParental LeaveUsually an employer HR benefit that provides salary continuance only for the birth or adoption of a child.10
PFML legislative ALGAPRLAFLHICNMIGUAM DEMDSCMSAKDCNCTNOKNMVAKYApproved and activeApproved – future start dateProposed billNo plan at this timeMARINJOHCOCACTPAIAUTNHNYWIVINOTE: Some of the stateshave proposed paidparental leave laws and notfull paid family and medicalleave laws. Delaware hasadopted a paid parentalleave law for stateemployees that is effectiveJuly 1, 2019. Hawaii has astatutory disability programin effect and is evaluating apaid family leave program.11
Paid Family & Medical Leave (PFML) Laws:Current & ProposedStates California Connecticut (premiums collected1/1/21& leaves eff. 1/1/22) Delaware (state EEs only/parentalleave only eff. 9/1/19) Hawaii (disability only)* Massachusetts (premiums collected7/1/19 & leaves eff. 1/1/21) New Jersey New York Rhode Island Washington (premiums collected1/1/19 leaves eff. 1/1/20)*On 7/5/18, Hawaii Gov. Ige signed lawrequiring legislature to propose PFLlegislation by 9/1/19.FederalProposed legislation Federal Tax Credit for PFML (expires US Congress12/31/19) Family Act (Gillibrand) WorkFlex (Mimi Walters)Cities/Districts/Territories Econ. Security for New Parents Act (Rubio) San FranciscoStates Colorado(parental leave only) Georgia District of Columbia (premiums Illinoiscollected 7/1/19; leaves effective Maine1/1/20) Minnesota Puerto Rico (disability only) Nebraska New Hampshire (passed legislature but vetoedby Governor) Oregon Vermont . . . and more!
PFML state administration modelsRhode Island &Washington DCCalifornia &Washington StateAdministrationonly State hasPrivate planbut strictlycontrols useNew JerseyMassachusetts *New Hampshire (D)Connecticut* State allowsliberal use ofPrivate PlanNew YorkHawaii OnlyPrivatePlansNew Hampshire (R)& Vermont (R) Private Marketcreation13
Employer perspective – PFML complexity National Car Rental CompanyOperates in all 50 statesGoal is to find a service providerto easily explain process toemployees who need to securejob protection and pay whileneeding time offWork Location shouldn’t impactthe individual experience14
Employee PFML experience breakdown1.Will my paycheck continue?2.Will my job be there when I return?Scenario: Let’s review a new mother’s benefitsacross different potential work locations15
FL EmployeeWeeksWk1 Wk2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 Wk9 Wk10 Wk11 Wk12 Wk13 Wk14 Wk15 Wk16 Wk17 Wk18 Wk19 Wk20FMLASTDER Parental LeaveCA EmployeeFMLACalifornia FamilyRights ActCalifornia StateDisabilitySTDCalifornia PaidFamily LeaveER Parental LeaveWeeksWk1 Wk2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 Wk9 Wk10 Wk11 Wk12 Wk13 Wk14 Wk15 Wk16 Wk17 Wk18 Wk19 Wk2016
NY EmployeeWeeksWk1 Wk2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 Wk9 Wk10 Wk11 Wk12 Wk13 Wk14 Wk15 Wk16 Wk17 Wk18 Wk19 Wk20FMLADisability BenefitslawSTDPaid Family LeaveER Parental LeaveMA EmployeeFMLAMA Parental LeaveActPaid MedicalLeaveSTDPaid Family LeaveER Parental LeaveIncludes Job protectionWeeksWk1 Wk2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8 Wk9 Wk10 Wk11 Wk12 Wk13 Wk14 Wk15 Wk16 Wk17 Wk18 Wk19 Wk20Includes Job protectionIncludes Job protection17
Challenges to Client experience successState Mandated PFML rating– Command and control like NY PFL; limited flexibility like MA & WAUncertainty on whether leave management program expensepricing can introduce services that improve PFML productexperienceStates ultimately determine if/how their state program can beintegrated for large multistate employers18
Value-added services are not insurance, are offered only on specific lines of coverage, and carry a separate charge, which is added to the cost of theinsurance. The cost is included in the total amount billed. Absence Management Services are provided by ComPsych . ComPsych is a registered trademarkof ComPsych Corporation. The entities that provide the value-added services are not subcontractors of Sun Life and Sun Life is not responsible or liable forthe care, services, or advice provided by them. Sun Life reserves the right to discontinue any of the Services at any time. This offering is available in all statesfor employers with 200 lives. For employers with 200 to 499 employees, the offering must be packaged with a Sun Life insurance policy. For employerswith 500 or more employees, the offering may be packaged with either a Sun Life insurance policy or a Sun Advisor Advice to Pay service. Not available withStop-Loss, physician insurance policies, or Sun Advisor voucher products. Employers who provide group insurance coverage and make available value addedservices within an I.R.C. Section 125 cafeteria plan should consult a tax professional to determine whether those services are Qualified Benefits for Section125 plans.This content is not to be considered legal advice. We recommend Clients speak with legal counsel specializing in labor and employment law to ensure yourorganization has met all of the requirements under the Massachusetts Paid Family & Medical Leave (PFML) Act. 2019 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life Financial and the globe symbol are registeredtrademarks of Sun Life Assurance Company of Canada. Visit us at www.sunlife.com/us.GDIPPT-8670aSLPC 29613 06/19 (06/20)
Pricing Implications of PaidFamily & Medical Leave (PFML)Thomas A. Tipton, FSA, CERA, MAAA7500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Absence Management Product SpectrumTraditional Absence Management Product SpectrumSTDLeaveLTD FML/ADA Short-term Disability State/Local Leaves Employer Leaves State MandatedDisability Long-term DisabilityAbsence Management Product Spectrum with Paid Family & Medical Leave (PFML)STDLeaveSTDLTDPFML2127500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
High Level Product e223Bonding,FamilyCare,andMedical50-90% toSAWW* for TDLTDFML jobprotection,employersponsored Typicallyunpaid orself-funded50-70% to 1-3k/weekfor 13-26weeks50-70% to 1-410k/monthto SSNRAFederalmandatePrivateinsurance orself-fundedPrivateinsurance orself-funded*Range of State Average Weekly Wage (SAWW) in approved states is 1,100 to 1,4007500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
My State Just PassedPFML, Now What Do I Do?Do you want to offer the approvedPFML program in these states?Recent passed legislation in WA andMA have rates set by the state however,there is a provision that allowsemployers to opt-out (self fund orhave private insurance)Evaluate the offering: What are the details of the plan What is the impact of the new law onprofitability, expenses, etc What is the impact to my otherproducts (think STD) How does this fit in with mybusiness strategy2347500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
What is the plan design? Benefit percent, maximum, and durationWhat Are the Detailsof the Plan?Each state is different soread the law and regulations! What is the definition of medical andthe ability for claim management What is the definition of family(will there be anti-selection)Who is administering the program? What is the role for private insurance Administration complexity Intermittent leaves, interaction betweenmedical and family, shared duration2457500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Things to ConsiderWhen Reviewing aState Plan Who pays for PFML (employee,employer, both) Is the rate set by the state or is therean opportunity to underwrite Even if there is a private option,what are the conditions for theprivate market As you define your business case, itis important to have a line of sight tothe expected profitability (or loss) ofthe PFML program2567500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Determining the Profitability of the PlanNeed to develop your best estimate assumptionPotential data sources Internal STD data Internal Leave data (FMLA) Public information from other states (NY, RI, NJ, CA, etc)Understand your data set Determine how the product was marketed/sold Is it paid (STD) or unpaid (FMLA) What is the demographics (exposure base) What are the benefit levels2677500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Developing Your Claims Cost AssumptionsEvaluate any needed adjustments due to demographics and plan designDemographics Is your data set representative of your future customers in terms of industry,geography, salary, gender, etc How you plan on marketing/selling this product will be important to considerPlan Design Replacement ratio – Impact incidence and/or duration Definition of family – Impact in incidence How should you think about intermittent claimsIs there any interactions with your other products? Do you expect a change in claimant behavior on which product to use2787500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Developing Your Expense AssumptionsWhat claim expense model do you start with? Leave? STD? Once you have your baseline, determine what adjustments need to bemade specific to the state PFML plan Is there a shared entitlement between the medical and family How many intermittent claims do you expectWhat are the reporting requirements? Consider if any new data fields need to be capturedIs there any interactions with your other products?2897500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Things to Consider When Reviewingthe Impact to Other ProductsSTDLeaveLTDPFMLDoes PFML interact with other products, if so howWhat is the PFML plan designbenefit amount, duration, definition of claim, etcDetermine the impact to the administration of existing productsWill there be an impact to expenses especially overhead coverageDo you need to refile your contract and/or ratesAre there any differences for manual versus experience rated business297500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
What is YourBusiness StrategyThings to consider:Business strategy What are your client’s objectives:compliance at the lowest cost oremployee experience How much investment do you needto make to offer the state planImpact on business planning Will it be profitable Will your target market buy from youinstead of the state What is the impact to other productsmost notably STD307500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Wrap UpBe vigilant – Many states are proposing PFML legislation including at a federal levelStay informed – Each state has their own unique twistDo your homework – Pricing impacts will vary by state based on theirprogram specifics. Look at not only expected claims cost but impact to claimsprocesses, state mandated reporting, and expense/commissions pressures (overhead)317500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
THANK YOUThe Hartford is The Hartford Financial Services Group, Inc. and its subsidiaries, including underwriting companies Hartford Lifeand Accident Insurance Company and Hartford Fire Insurance Company. Home Office is Hartford, CT. 2019 The Hartford7500 NS 05/19 2019 The Hartford. Confidential. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Session 29, Absence Management and Paid Family Leave Plans . SOA Antitrust Disclaimer SOA Presentation Disclaimer. 2019 Health Meeting JONATHAN KEMP, MBA THOMAS A. TIPTON, FSA, CERA, MAAA . The cost is included in the total amount billed. Absence Management Services are provided by ComPsych . ComPsych is a registered trademark
