FMLA vs PFL: The DBL Center explores the differences
Since New York introduced Paid Family Leave, there has been a lot of confusion. Brokers, HR directors, employers and employees are just beginning to understand what PFL means and who it will affect.
One point of confusion: Many people believe the Family and Medical Leave Act (FMLA), the federal law put into place during the Obama administration, is the same as New York’s PFL.
In fact, the two are loosely related, and can be applied in conjunction with each other.
But they are not the same thing.
FMLA vs PFL: What Is The Difference?
For starters, FMLA is a federal level law, while PFL provides benefits to employees at the state level.
The key difference in FMLA vs PFL is that FMLA is not a paid leave. It offers no compensation to employees taking time off. PFL in New York, on the other hand, provides both job protection and income for employees on leave.
Read on as The DBL Center, your expert in Paid Family Leave in the New York Tri-State area, explains more you should know about FMLA vs PFL.
What Is the Family and Medical Leave Act (FMLA)?
The Family Medical Leave Act was signed into law by the federal government to protect the jobs of employees who have to take time off for medical reasons of their own or to care for a sick or disabled family member.
When the employee returns from leave, the employer must be able to provide that employee with the same position they had before or one that is equivalent in pay, benefits, and status. While the employee is out on leave, the employer must also maintain their benefits at the same level as when they were working.
FMLA vs PFL: Who Can Make a Claim?
FMLA legislation applies to people who take medical leave for themselves or take time off to care for a loved one.
On the other hand, Paid Family Leave applies only to employees taking time off to care for family members. Employees can make a PFL claim to take time off to care for ill or disabled family members, infants, adopted or foster children within the first year of care, or any family member while a spouse in the military has been deployed.
Employees who are ill or injured, themselves, would need to file a DBL claim in New York to receive income while they cannot work. They are not eligible for PFL. However, the employee’s job would be protected on the federal level by FMLA if they meet the other requirements, such as total number of hours worked for that employer.
Eligibility Requirements for FMLA vs PFL
FMLA applies to companies with 50+ employees. PFL is available to any eligible employee working for a business with one or more employees. This makes PFL available to more New Yorkers than FMLA.
The employment requirements for PFL are also less stringent. Employees working 20+ hours per week must have worked for 26 consecutive weeks at their current, covered employer to make a PFL claim. Part-time employees who work less than 20 hours per week must have worked at least 175 days for their current employer.
On the other hand, employees must have worked at least 1,250 hours each month for the past 12 months at their current employer to qualify for job protection under FMLA.
FMLA vs PFL: Other Important Differences
There are a few other differences in FMLA vs PFL, such as how the federal government and the state government define family. For instance, the FMLA does not protect the jobs of employees who take time off to care for an in-law. Employees would make a PFL claim, instead, for income and job protection.
The rules of FMLA vs PFL also differ slightly for members of the military and their spouses.
Finally, the federal government offers FMLA time off in increments of 15 minutes, while employees make a PFL claim for time in days, which will gradually increase to a maximum of six weeks by 2021.
NJ Family Leave Act: What Is It?
To further complicate things, if you live in the New York tri-State area, you may also have heard of the New Jersey Family Leave Act. Where does NJ FLA fit in?
New Jersey’s FLA, similarly to the federal FMLA program, does not provide New Jersey workers with paid leave. It only offers job protection to those employees. New Jersey employees would make a TDB (Temporary Disability Benefits) claim to receive income if they are unable to work due to medical reasons.
Similar to PFL in NY, the FLA is broader than the FMLA in its definition of “parents.” New Jersey employees can take time off to care for in-laws, step-parents, foster parents, adoptive parents, or anyone with a parent-child relationship with the employee.
Putting It All Together
New York’s new PFL coverage puts our home state on the cutting edge of protecting and providing for employees caring for family members. It exceeds FMLA coverage in many ways, including a broader scope and paid benefits for claimants.
However, the FMLA was an important stepping stone toward PFL adoption. It is also important to protect employees in other states, who may not have access to PFL benefits to protect their jobs and provide them with a living wage during leave.
As a broker, it’s important to understand the difference in FMLA vs PFL. If your customers ask, you want to be prepared with the right answers. Presenting yourself as an expert in PFL coverage will help you gain the trust of your customers and pave the way to referrals and increased profits through the sale of enriched DBL and ancillary benefits.
PFL is Almost Here:
Visit our PFL resource center to be sure you are ready.
by Dawn Allcot
From the duration to the benefit payouts, DBL and PFL differ significantly.
Brokers in New York can now sell a new mandatory benefit: Paid Family Leave. We’ve been talking about this new coverage since New York State announced the law in April. As January approaches, the benefit becomes reality in two short months.
As news of the coverage begins to spread, employers and employees have questions. It’s important for brokers to establish themselves as trusted experts and to explain the benefits in a simple, straightforward manner to company executives and HR professionals.
What’s The Difference between PFL and DBL?
The main difference is that employees take DBL if they are injured or ill. Employees take PFL to care for someone else. That’s the most important thing to remember.
However, there may be some overlap. For instance, a new mom may file for DBL if she needs time off for her body to recover from childbirth. When that coverage ends, she can collect PFL to spend time with her new baby.
In most cases, it’s pretty obvious to determine which benefit an employee should collect. And there are some pretty big differences between the two benefits.
Let’s explore seven ways DBL and PFL are different.
1. Eligibility Requirements
Both full-time and part-time employees may qualify for PFL or DBL coverage. Requirements vary.
Full-time employees must work 20+ hours a week and have been employed at least 26 consecutive weeks at their current employer to qualify for PFL.
To qualify for DBL, employees must work the number of hours that the employer considers a full-time work week, and have worked at least four consecutive weeks for any covered employer.
Important to Note: DBL coverage eligibility transfers from one job to another in many cases. PFL does not.
Part-time employees must have completed at least 25 work days at any covered employer to qualify for DBL. To qualify for PFL, 175 days at their current employer is required.
2. Waiting Period
The waiting period for DBL is seven days from the date of filing. Paid Family Leave has no waiting period, so employees can begin collecting benefits immediately.
3. Maximum Leave
DBL has the edge here. Employees can take up to 26 weeks in any consecutive 52-week period.
PFL provides 8 weeks of benefits beginning in 2018, increasing to 12 weeks in 2021 in any consecutive 52-week period.
It’s important to note that employees cannot collect PFL and DBL benefits at the same time. One must stop when the other begins. In that situation, the combined duration for both benefits is capped at 26 weeks during any 52-week time span.
4. Job Protection
As part of the Family Medical Leave Act, which is a national law, employees who take Paid Family Leave receive job protection for the duration of their leave, regardless of the size of the company. Employers must hold their position or provide a comparable position when an employee returns from PFL.
DBL offers no job protection for ill or injured employees.
5. Benefit Offsets
You can collect DBL benefits concurrently with Paid Time Off, such as sick days or vacation time. This can help employees make ends meet by collecting a full paycheck plus DBL benefits for a time.
On the other hand, you cannot use PFL with other PTO.
Employee contributions for DBL are capped at 60 cents per week, regardless of the employee’s average weekly wage.
PFL benefit contributions are capped at 0.126 percent of the employees’ weekly wage, to a maximum of $1.65 per week in 2018.
7. Benefit Payouts
DBL pays 50 percent of an employee’s average weekly wage up to $170/week. PFL has a more generous benefit, phased in to start at 50 percent of an employee’s average weekly wage in 2018, and topping out at 67 percent of the employee’s average weekly wage by 2021.
The major difference is the cap. While DBL caps out at a less-than-living wage of $170/week, PFL is capped at New York’s Average Weekly Wage, currently $1,305.92.
Enrich DBL Now
In New York, although the maximum employee contribution for DBL is much lower than PFL, so is the benefit payout. In other states that mandate PFL, disability insurance and Paid Family Leave provide comparable benefits.
Employers are wise to consider enriching New York State DBL coverage now. Enriched DBL benefits packages that are more in line with PFL benefits can help reduce fraud, improve employee morale, and increase retention rates. (We’ll talk more about this in a future post, so stay tuned.)
It’s up to you, the broker, to educate your customers on the options today. DBL Center is here to help.
Contact our disability insurance experts about PFL riders and enriched DBL coverage now.
History (nearly) repeats itself with the introduction of Paid Family Leave
October 29, 2012: It was a sad day for many New Yorkers as properties were swept away in Superstorm Sandy, businesses went under, and more than 8.1 million homes across the U.S. were left without electricity for a week or more.
Superstorm Sandy caused losses totaling $19 billion dollars, resulting in delayed payouts and financial hardship to the insurance agencies that paid out more than they’d earned in premiums. Many P&C brokers struggled to survive.
Meanwhile, Zurich Insurance Company, a leading global business insurance carrier, had just left the New York State DBL market a week prior due to a number of factors. Turmoil and uncertainty plagued the industry, as New York tri-state area business owners struggled to pick up the pieces and adopt a “new normal” after Sandy.
Here we are almost exactly five years later, and the entire U.S. is banding together to assist those suffering from the aftereffects of Hurricanes Harvey and Irma in Texas and Florida.
In New York, as we write this, the wind whips outside the windows of our Long Island headquarters, and the nearby Costco parking lot is packed as Long Islanders brace for a tropical storm —which could be the first of many this ominous hurricane season.
In the disability insurance sector, changes are once again brewing that have nothing to do with Mother Nature’s wrath. Paid Family Leave, a necessary insurance coverage that will provide employees with a living wage as they take time off to bond with a newborn or newly adopted child, care for an elderly parent, or hold down the fort while their spouse serves in the military, may burden some disability insurance carriers past their breaking point.
We don’t want to be alarmist. We only want to report the news with our analysis as we see it.
The Problems with PFL that No One Else Is Talking About
There are only a few select carriers that have committed to write PFL, which is offered as a mandatory rider to DBL coverage in New York State beginning January 1, 2018. Fortunately, those carriers are doing an excellent job of educating small business owners and HR directors about the implications of the coverage, as well as giving brokers what they need to know about the policies. DBL Center brokers have the added advantage of our industry experience and knowledge, along with access to educational webinars and live informational sessions. We’ve worked hard to make the transition to mandatory PFL coverage easy for brokers and small business owners alike.
But some challenges remain. Because PFL coverage is mandatory and written with DBL coverage, brokers will be left with fewer choices for DBL. Some carriers have already left the market, just as Zurich did five years ago. We expect many more to exit in the beginning of 2019, after the numbers come in for the first year of PFL coverage.
PFL, as it stands, is not profitable for insurance carriers. Payouts could easily total more than premiums, leaving carriers in the same position P&C brokers faced immediately following Superstorm Sandy. Some carriers will write PFL riders—because the only other choice is to leave the game altogether. But they may not offer commissions on the riders. Some carriers are recommending that brokers write enriched DBL on their existing policies to earn the commissions they expected from PFL.
Enriched DBL: The Answer to Bigger Commissions
There are a number of reasons to enrich DBL coverage right now. Not only is enriched DBL one of the more profitable products for brokers to write, it also provides customers with the best coverage for their money.
As an example, small business owners can enrich DBL coverage in $50 increments for just 44 cents every $50, up to $850 total. For an investment of just $5 a year, employees can get $50 more per week for up to 26 weeks. It doesn’t make sense not to enrich DBL. Paid Family Leave was carefully designed to provide employees with a living wage while they are out on leave. Mandatory DBL coverage only pays a maximum of $170 per week. Who can live on that in New York?
Most states that offer Paid Family Leave offer comparable benefits for disability claims. This helps reduce fraudulent claims and helps maintain employee morale by leveling the playing field and offering all employees comparable benefits if they need them.
DBL Center Brokers: Weathering the Storm
With Harvey and Irma on our minds, New Yorkers last week prepared for a storm that never came. Just like Mother Nature, the insurance industry is fickle. And, in both cases, it’s important to be prepared.
Carriers can exit at any time, for any reason, just as Zurich did in 2012. Who will be next? Brokers who align with DBL Center preferred carriers who are writing PFL riders are protecting themselves against changes in the marketplace.
Educate your customers about PFL riders before someone else does. Be their authoritative source and guide them to the right decisions, including enriching DBL so it is in line with PFL benefits.
Fortunately for brokers working with The DBL Center as their insurance wholesaler, we make it easy to write enriched DBL policies and earn greater commissions. Stay tuned, because next week we talk with our Director of DBL and TDB Benefits, Selena Kutschera, to show you just how simple it is to increase commissions with enriched DBL in three easy steps.
Meanwhile, stay safe and dry. The best protection against any storm is the right preparation. Our thoughts are with those across the country affected by this season’s hurricanes and storms.
Bold statement from DBL Center President Michael Cohen leads into how brokers can grow their book of business with PFL
P&C and health brokers know that enriched DBL in New York can be a tough sell.
As a mandatory benefit, DBL is a no-brainer, but let’s face it: The commissions aren’t making anyone rich. That’s why we promote enriched DBL, as well as ancillary benefits, including vision, dental, and even life insurance as a way for brokers to expand their book of business and make more money.
But with the introduction of the Paid Family Leave Act, DBL is finally relevant again. That is to say, it’s not only making headlines everywhere in New York, it’s also become profitable. “Health brokers, life brokers, P&C brokers, even estate planners and CPAs are using PFL as a tool to broaden their book of business. And, of course, here at The DBL Center, we love it,” says Michael Cohen, DBL Center President.
Questions about PFL?
If you’re reading this, you probably know that PFL coverage, which goes into effect in New York on January 1, 2018, will be written as a rider to existing DBL policies. And that employers were allowed to begin deducting premiums as of July 1, 2017. “A lot of brokers and employers face some confusion or hesitation about the payroll deductions,” says Michael Cohen. “I’m telling people not to get hung up on the deduction, but instead think about how you are marketing PFL to grow your book. As brokers, at the end of the day, it’s all about taking advantage of these opportunities to increase profits.”
The DBL Center is taking a multi-faceted, multi-tiered strategic plan to marketing PFL which, in turn, helps their brokers. “We’re relying on our relationships with top carriers, and differentiating ourselves with educational content, including webinars and thought leadership articles. We are building an even stronger social media presence on LinkedIn, and we are leveraging the relationships I have in the entertainment industry to organize seminars and talks with celebrity tie-ins,” says Michael Cohen. “In essence, we are working hard to make the industry fun again while sharing information and promoting a very profitable – and important – product.”
Still have more questions about PFL and how to use it to grow your book of business?
DBL Center President Michael Cohen recently recorded a video with ShelterPoint that tackles many of the toughest questions about PFL coverage in New York.
Make sure to watch to the end, because you won’t believe what Michael Cohen says about how PFL will change the DBL industry —for the better. Watch the video here, and use the information to drive PFL marketing campaigns within your own brokerage.
One of The DBL Center’s preferred carrier partners, AmTrust, offers the information you need to help your clients get ready for PFL and ensure compliance.
“At the early stage of any new insurance regulation, education is key.” This is how Joy Maas, Director of Marketing, Sales, and Accountant Management for AmTrust Financial Services, a top provider of New York and NJ state disability benefits, began our recent conversation about the Paid Family Leave regulations going into effect January 1, 2018.
For employers, education means learning how to ensure compliance with the new regulations, understanding what the PFL benefit covers, and knowing where to turn with questions they might have.
For our insurance brokers, it means partnering with carriers, through The DBL Center, who are prepared to offer PFL as a rider to existing DBL policies. More importantly, it means taking advantage of the tools and resources available so that you can continue to educate your clients on what they need to know.
“One of the best ways brokers can get more attention and write more business, right now, is to be the expert on the topic of PFL,” Maas continues. “Be the educator.”
Resources for Brokers
Since the day the news broke about PFL, The DBL Center has kept our brokers updated with information via our blog, newsletters, and a seminar series hosted and sponsored by The DBL Center and featuring our top carriers.
Brokers who show their customers they are well-versed in PFL will be in a position to earn additional business by writing PFL riders to existing DBL policies, and brokers who write their business with The DBL Center have a choice of top carriers and a host of resources at their fingertips.
PFL Compliance is Key
Of all the details available about PFL, compliance is, perhaps, the most critical. Brokers can use consultative selling techniques to build trust and explain how employers can purchase PFL coverage to avoid hefty fines and liabilities.
Employers should know, PFL compliance requires that they:
Penalties for Non-Compliance
Additionally, employers should know that the Workers’ Comp Board is allowed to assess non-compliance penalties up to ½ of 1 percent of the employers’ weekly payroll for the period of non-compliance, as well as mandating that the employer pay any PFL claims. An additional penalty of up to $500 may also be assessed.
Non-compliance is pricey, while PFL compliance is simple. And although we don’t know the premium rates at this time, we should know soon. When the rate is announced, you’ll be sure to read about it here on The DBL Center blog and in our newsletter.
Let the Education Continue
Maas asserts that the brokers who are willing to educate their clients on PFL are the ones who will win the business—and possibly even sell enriched DBL policies at the same time. “Let your clients know what PFL means, how it looks, and what they can do to prepare,” she tells brokers.
Maas and her colleague, David Clark, will co-present a seminar sponsored by The DBL Center Ltd. and hosted by DBL Center Partner Michael Cohen on June 7, 2017, from 2 to 4 PM at The DBL Center headquarters in Melville, NY. For details please send an email to firstname.lastname@example.org. Space is limited.
At this fun and informative event, both AmTrust and DBL Center representatives will answer our brokers’ questions about PFL and share all the details you need to sell this new mandatory benefit knowledgeably.
NY Paid Family Leave, the most comprehensive Paid Family Leave program in the country, is set to go into effect January 1, 2018. But for employers and brokers preparing for the moment, the date isn’t as far off as it sounds. And employers can begin making payroll deductions as early as July 1, 2017.
First, a quick recap of the proposed regulations:
NY Paid Family Leave provides employees with the income they need to enable them to stay home and care for:
Paid Family Leave will be phased in over the next four years, until 2021, when PFL will pay out the maximum coverage of 67 percent of an employee’s average weekly wage for 12 weeks. Coverage will be community rated to promote a fair and efficient market, and coverage will be written as a rider to existing DBL policies.
You can learn more about the specific details of the law in this blog post, when The DBL Center blog broke the news to our network last April.
In the past year, we’ve been staying on top of the news and we’ve discovered some interesting facts:
Because PFL coverage will exist as a rider to current New York State mandatory DBL coverage, these changes affect P&C brokers who write DBL coverage. Brokers SHOULD look at the coverage as an opportunity.
The DBL Center and our carriers are here to help you leverage this opportunity for increased commissions (whatever the actual amount may be!) on mandatory, employee-funded PFL coverage. The process is one of education and consultative selling, rather than hard sales. And The DBL Center is here to assist every step of the way, with the information our brokers and their customers need to make the best decisions and guide you in this new claim process.
Our soon to be released mobile app, combined with the technical infrastructure provided by preferred vendors to process policy riders, gives our brokers the tools they need to be successful in this new venture.
It’s also a good time for our brokers to review and enrich existing DBL policies beyond the state minimum, in preparation for the Governor’s office to potentially increase the DBL benefit. After all, Governor Cuomo’s father Mario was the last one to increase the weekly indemnity back in 1989. We never know. Changes are ahead, and they promise to be good ones for brokers who work with The DBL Center as their insurance wholesaler and have the tools to take a consultative approach to selling DBL in New York.
But what are the rates for NY Paid Family Leave? And how much do brokers stand to make from the new PFL coverage? These are the top questions on the minds of many of our brokers. Certainly, the state acknowledges that brokers’ workloads will increase as a result of the new coverage, and industry experts believe rates will be fair to enable reasonable broker commissions. But right now, all we can do is expect the best.
The good news is that all the uncertainty ends on June 1, when the state announces the coverage rates. Soon after that, carriers will announce broker commissions. And employers are permitted to begin deducting payments for NY Paid Family Leave premiums beginning July 1.
In addition, brokers have until April 8 to read the draft regulations and make comments. The full text of the regulations can be found here.
Meanwhile, We Wait…
As we wait for the proposed regulations to pass and the State of New York to set the rate, it’s important to continue educating employers on the law. That way, when the time comes for them to purchase this mandatory coverage and, even before then, to begin making payroll deductions on July 1, they will know where to turn.
Stay tuned for further information regarding our Q&A seminar at The Friar’s Club next month in conjunction with The New York Business Council and one of our preferred vendors. With The DBL Center behind you, our brokers are poised to make the most of NY Paid Family Leave.
by Michael Cohen