Opportunities Grow for Statutory Insurance Brokers

Map of United States

The past year has brought shake-ups for statutory insurance brokers.

  • Record-high rate hikes for temporary disability benefits (TDB) in New Jersey
  • New Family Leave Insurance benefits for New Jersey
  • Increased benefits for Paid Family Leave in New York
  • The introduction of family and medical leave coverage in two more New England states

Smart insurance brokers can easily find a silver lining in much of the new legislation. Opportunities exist for statutory insurance brokers to expand into new regions, upsell enriched coverage, and guide business owners toward the benefits of a private plan rather than writing their insurance through their state’s fund.

In fact, 37 states threw their hats in the ring this past election to pass Paid Family Leave acts on a state level. As more states embrace paid family leave legislation, it could ultimately become federal, where it would work in conjunction with the federal Family Medical Leave Act (FMLA), which offers unpaid job protection for those who are out of work due to illness or to care for family members.”

Statutory Disability Coverage Across the U.S.

Moving into 2021, nine states, Washington D.C., and Puerto Rico offer statutory disability plans to employees. Of those states, only Hawaii, New Jersey, and New York provide options to privatize statutory disability through an independent insurance carrier.

Take a look at this chart to see which states offer self-funding options in lieu of the state plan, and also which states permit private coverage through an insurance company.

Paid Family and Medical Leave Plans Across the U.S. at a Glance

California, New Jersey, New York, Washington, Massachusetts, and Rhode Island offer Paid Family Leave as subsets of statutory disability plans. For instance, PFL in New York is written as a rider to DBL coverage.

In New Jersey, Family Leave Insurance is included automatically with TDB premiums. In Massachusetts and Connecticut, the Paid Family and Medical Leave Act covers both family leave and medical leave. It can be written through the state fund or through a private insurance carrier.

It is important to note that workers cannot collect statutory disability or paid family leave concurrently with unemployment insurance or workers’ compensation benefits.

2020 Brought Changes to Statutory Disability and Paid Family and Medical Leave

Let’s take a look at the year in review and some of the changes that were instituted for statutory disability and family medical leave coverage across the U.S.

After Waiving the Signature Requirement to Privatize TDB, New Jersey Increased Premiums and Benefits

In 2019, New Jersey waived the signature requirement for employers to obtain temporary disability benefits coverage through a private carrier. In the past, employers needed to obtain signature consent from 50% + 1 of employees to privatize TDB in New Jersey.

This presented opportunities for brokers, since it became easier than ever to convince business owners to switch to a private carrier for superior service, more flexible benefits, and up to 20% cost savings.

In 2020, New Jersey increased TDB insurance premiums, but also expanded disability coverage up 85% of a worker’s average weekly wage, up to $881 per week. The state also expanded its Family Leave Insurance benefits and eliminated the 7-day waiting period to begin collecting FLI benefits.

The increased premiums give business owners more reasons than ever to write their TDB coverage through a private insurance broker.

New York Increased PFL Coverage as Per Initial Plans

New York State made headlines in 2017 when it introduced one of the most robust Paid Family Leave plans in all 50 states, rivaling California’s generous policy.

Benefits continued to increase through 2021, when they will reach a high of 67% of the current statewide average weekly wage (AWW). Workers can collect up to $971.61 per week in 2021.

With PFL benefits at their maximum, it’s more important than ever for New York business owners to consider enriching DBL coverage so it is in line with PFL.

Massachusetts Signed the Paid Family and Medical Leave Act

Massachusetts announced the MA Paid Family Medical Leave Act, PFML, in the middle of the year, with coverage beginning January 1, 2021. These benefits cover paid leave to care for infants, or children newly adopted or fostered within the past 12 months. Additional benefits will roll out July 1, 2021, with time off to care for any family member with a serious health condition.

Connecticut Introduced Family and Medical Leave Insurance

Following in the steps of neighboring New York and Massachusetts, Connecticut also introduced a Paid Family Medical Leave Act that goes into effect January 1, 2022, but employers must register with the CT Paid Leave Authority by December 31, 2020. Payroll deductions for PFML begin on January 1, 2021 for the state plan.

Private Plans Create Happy Customers

As more states add paid family leave benefits to their statutory disability programs, it’s important to understand the opportunities insurance brokers have to give their customers top-notch service, flexible claims, and potentially lower premiums through private coverage.

Reference the PDF here for clarity on the states currently offering PFL, FMLA and statutory disability or rolling out programs in the new year so you can be prepared to provide your customers with the best statutory disability benefits for their money.

To provide quotes for statutory disability for new customers, you’ll need a census containing the ages, genders, and salaries of all the owners and employees of the corporation. Reach out to The DBL Center through our chat box or call us at 631.293.5100 to get started.

 

 

 


How the Massachusetts Family Leave Act Changes Everything for Massachusetts Business Owners

Last year, Massachusetts passed the Massachusetts Paid Family and Medical Leave Act (PFML).

The law entitles all Massachusetts employees and some independent contractors paid family leave of up to 12 weeks to care for a family member and paid medical leave of up to 20 weeks for a non-work-related injury or illness. (Read more about paid leave in Massachusetts here.)

The law benefits employers and employees who may need to take leave for the above reasons. The benefit is shared, which means employers and employees each pay a portion of the premium. But the onus is on employers to adhere to the law and to understand the benefits available.

Benefits don’t go into effect until January 1, 2021, but Massachusetts business owners should educate themselves on the law now. They can start paying premiums for Massachusetts Paid Family Medical Leave as early as this month.

Massachusetts business owners can privatize benefits under the Massachusetts Paid Family and Medical Leave Act, gaining personalized service and better rates. By law, private benefits must be as good – or better – than the state-funded plan.

Business owners should not go it alone. DBL Center and its vast network of brokers can help business owners understand the advantages of privatizing PFML coverage for cost savings and better service.

Who Is Subject to the Law?

The new law applies to all the employers and businesses with more than one Massachusetts employee, though with limited exception.

The law covers:

  • Massachusetts employees
  • 1099-MISC contractors
  • Self-employed individuals

Calculating Massachusetts Paid Family and Medical Leave Act Premiums

Premium payments, often a combination of employer and employee contributions, depend upon the makeup of the company’s workforce.

To ensure an accurate premium bill, Massachusetts business owners should ensure they are correctly reporting the size and makeup of their workforce in Massachusetts to the Department of Family and Medical Leave. The total workforce generally includes:

  • All Massachusetts W2 employees (part-time, full-time, seasonal)
  • 1099-MISC contractors only if they comprise more than 50% of the total workforce

Under the law, Massachusetts employers are responsible for providing coverage for all W-2 employees. However, 1099-MISC contractors are included in the total number of covered individuals only if they comprise more than 50 percent of the total workforce, which means W2 workers and 1099-MISC contractors combined. It’s also worth remembering that a contractor is considered a 1099-MISC only if they are paid a minimum of $600 in the tax year.

Employers are not required to provide Massachusetts Paid Family and Medical Leave Act coverage to 1099 contractors, even if they make up 50% of the workforce.

Who Pays the Premium?

Employers who employ 25 employees or more are required to make a contribution of 0.75 percent of eligible payroll to the Department of Family and Medical Leave.

This contribution may be split between the employer contribution and employee payroll deductions. Payments will help the state of Massachusetts to fund both family and medical paid leaves.

Employers with less than 25 employees must make contributions to the Department of Family and Medical leave, but they are not responsible for paying the employer’s share. PFML in Massachusetts is fully funded by employee contributions for businesses with under 25 lives.

What Should Employers Do?

Employers should calculate the number of covered individuals you employ and get in touch with their accountant and payroll provider to make sure that they are prepared to start deducting premiums.

Then they should get in touch with a local broker who can help Massachusetts business owners save money by privatizing Massachusetts Paid Family and Medical Leave Act coverage.

As experts in statutory disability and PFL coverage across the Northeast United States, The DBL Center is prepared to help Massachusetts brokers help employers find the best rates for PFML.

The DBL Center and our brokers are ready to deliver superior service as business owners navigate a new world under the Massachusetts Paid Family and Medical Leave Act.

 


Massachusetts Paid Family and Medical Leave Act Payment Deadline Approaches

Members of the sandwich generation benefit from the new Massachusetts Paid Family and Medical LEave Act
Earlier this year, Massachusetts introduced the Massachusetts Paid Family and Medical Leave Act (PFML) for W-2 employees as well as some 1099 independent contractors. Benefits won’t go into effect until 2021, but employers can begin paying into the plan now.

July 1, 2020 marks the first deadline for payments.

As a shared benefit, MA Family Medical Leave Act premium costs are split between the employer and employees or contractors. Organizations with fewer than 25 employees can offer the plan to their workers as a voluntary, employee-funded benefit.

How Much Do Employers Need to Pay?

The DBL Center can write FMLA policies independent of other lines, so you can privatize policies under the Massachusetts Paid Family and Medical Leave Act affordably and provide your customers high levels of service.

With the first MA PFML payments coming up, your customers may wonder how much they owe for their plan, whether it’s funded by the state of Massachusetts or written privately.

Your premiums are based on the total number of your lives in your company, which includes all W-2 employees:

    Full-time
    Part-time
    Seasonal

You do not need to count 1099 contractors, as they are responsible to write their own policies and pay the full 0.75% contribution.

When clients provide you with the active employee count and wages earned, they should report figures for the prior 3-month period. Contributions made by July 1, 2020 should include the total headcount from April, May, and June.

What About Furloughed Workers?

As COVID-19, the novel coronavirus pandemic continues to strike across the U.S., many employers have laid off or furloughed workers. If furloughed employees or workers on unemployment have earned at least $4,700 in the prior 12 months before filing, they may be eligible to file a PFML claim in January if they meet all other requirements.

In most cases, employers would still pay into benefits packages for furloughed employees, so these workers would count toward the organization’s number of active lives. However, unemployed workers would not.

During the pandemic, many organizations laid off employees and then brought them back to meet the June 1 deadline for loan forgiveness on a Small Business Administration (SBA) loan issued as part of the Paycheck Protection Program (PPP). Employees re-hired by June 1 would need to be counted as part of Massachusetts Paid Family and Medical Leave Act premium payments.

Need Help Calculating Premiums for the Paid Family Medical Leave Act Coverage in Mass?

With so many changes going on for business owners right now, calculating Massachusetts Paid Family and Medical Leave Act premiums can be complicated. It depends on employers’ total lives for the past three months. These numbers may have varied wildly as employees were furloughed or laid off and then brought back as Massachusetts begins its phased reopening this week.

The DBL Center works with top Massachusetts statutory insurance carriers to provide the best service you’ll find. We’ll help you deliver the best rates and superior service to your customers with privatized Massachusetts PFML insurance policies.

Contact The DBL Center today.