If your employee needs to take time off from work to care for a sick family member, or because their spouse has had a baby, what are their options?

Many employers are aware that they can purchase short-term disability insurance to cover the wages of an employee who is out of work due to illness or injury. This coverage can be paid for by either the employer or the employee, and either way, it provides a partial paycheck for a set period of time to an employee who is unable to work because they are sick or hurt. But what about an employee’s family member? If your employee needs to take time off from work to care for a sick family member, or because their spouse has had a baby, what are their options?

Until now, there have not been many options for these situations. The Family Medical Leave Act (FMLA) provides 12 weeks of job protection to care for a family member, but this is generally unpaid leave. Some employers have a paid leave policy that they have crafted themselves and provide a period of paid time off for caregiving, but this is uncommon. What’s much more common is that people who need this time off usually take it unpaid or may even end up quitting their job entirely.

That may be about to change. Last year I wrote about a “mandatory” paid family and medical bill that passed the Vermont House. While it now appears unlikely the Vermont legislature will pass a similar bill in 2024, there is a voluntary leave option that will soon be available to employers. In December 2022, the state of Vermont contracted with The Hartford to create the Vermont Family and Medical Leave Insurance Plan (VT-FMLI), a program employers can buy into to cover partial wages for employees who need to be out of work due to a serious health condition or to care for a family member who is sick. The plan became available to all state employees in 2023, and beginning July 1, 2024, will be available to Vermont employers with 10 or more employees.

What is it?

In a nutshell, VT-FMLI is an insurance plan that employers can purchase, or make available to their employees to purchase, to cover wages lost due to a qualified event. The qualified events are:

• Birth of a child and care for the newborn in the first year of birth.
• Adoption of a child or foster care placement
• Caring for a spouse, child, stepchild, foster child, or ward who lives with the employee; parent or parent-in-law who has a serious health condition.
• A serious health condition that makes the employee unable to work.
• Any qualifying exigency arising out of the fact that the employee’s spouse, child, or parent is a covered military member on “covered active duty,” or to care for a covered service member with a serious injury or illness (“military caregiver leave”).

Employers can choose from a number of plan design options to provide partial wages for a period of time to these employees while they are out. Each employer’s cost for the plan will vary, depending on that employer’s size, industry, and demographics.

How does it work?

The employer will choose the plan design that works best for their organization, as well as the contribution arrangement. The plan can be paid for 100% by the employer, or 100% by the employee, or a combination of the two. If employee contributions are required, the employee’s participation must be voluntary. The administrator of the program is The Hartford, so the employer will complete an application with The Hartford to get the plan established. The earliest available effective date for the plan would be July 1, 2024.

After the plan is effective, when an eligible employee goes out of work for one of the qualified events, the employer will file a claim with The Hartford to initiate the employee’s payments.

What if I already offer short-term disability?

If you already offer short-term disability coverage to your employees, you may want to consider the Family Leave portion of the policy as a standalone benefit. This would pay employees only for the caregiving qualified events, but not for their own illness or injury, which would be covered by the STD plan. Or you may wish to purchase both the Family Leave and the Medical Leave policies, which could “top up” or enhance your existing short term disability benefit.

What does the plan look like?

Employers have a certain amount of flexibility to structure the plan, but here is the default plan design:

• Elimination Period (Period of leave before benefits begin): 0 days for family leave, 7 days for medical leave.
• Benefit Duration: 6 – 26 weeks per 12-month period.
• Coverage Amount: 60% - 70%
• Weekly Benefit Amount: Between $1,945 - $2,500

What's next?

The Hartford is providing quotes now for a 7/1/24 or later effective date. If you would like a no obligation quote for your Vermont employees for this valuable coverage, please contact a OneDigital benefits consultant. Want to learn more about what other states are doing in regards to PMFL, see Massachusetts Paid Family and Medical Leave (MAPFML) Update  &  How is Connecticut PFML Going with Employers?