Leave management: Carriers predict what’s next 

Almost 10 years after the Family and Medical Leave Act (FMLA) was passed on a federal level, California kicked off a series of state paid family medical leave laws (PFML). The last 20 years have seen a rollout of PFML regulations enacted in 11 states and the District of Columbia. 

Where do carriers see this regulation trend going? From December 2022 through February 2023, LIMRA surveyed carriers regarding their product and service offerings, strategy, and plans regarding leave and absence management programs. Topics included services offered, use of partners, staffing, technology systems and platforms, paid family and medical leaves, and overall strategies. This look at leave management allowed LIMRA to see what the future may hold for the industry, at least from the carriers’ perspective.

Most of the 18 carriers surveyed that currently offer absence management or leave management programs indicated they have been offering these services for more than 10 years. All respondents offer short-term and long-term disability, as well as employee assistance programs. Americans with Disability Act (ADA) services, return to work, stay at work, and wellness programs are offered by more than half of the companies.

Currently, the most common types of leaves are ADA leave as an accommodation, PFML, and FMLA leaves. If a type of leave is offered, the carriers typically administer the service on their own as opposed to a third-party resource. Five companies indicated they administer at least one leave through a partner. With carriers offering a range of leaves from 1 to 20, the number of regulatory/mandated leaves offered or administered by respondents varies widely. With more states adding these kinds of regulation each year, carriers have begun taking different approaches to monitoring the shifting landscape. While most of the respondents highlighted that their internal legal and compliance departments take on monitoring legislation and updates regarding paid family and medical leaves, roughly half also have dedicated internal resources focusing on PFML or the leave space overall. Other products designated compliance staff handle typically include short-and long-term disability and life insurance. Six of the responding companies noted that their product teams are monitoring these legislative updates. 

These internal areas are supplemented by industry associations and groups, external counsel, or commercial software products. Software companies that came up frequently included LeavePro, ClaimVantage, Lexis, Fineos, and Westlaw; other sources within the industry that companies use include Lewis & Ellis, and Littler. Twelve of the responding companies indicate this compliance update and support feature is part of the software used to administer leaves.

But what do carriers see as the future in this space? Thirteen of the 18 companies provided an opinion on how many states will pass PFML legislation in the next 3 to 5 years. Most respondents expect future-state PFML will be offered on both a voluntary and mandated basis.

Given the expectation of increased legislation on the state level, it is also worth noting that attention has also increased on leave management at a federal level. In the memorandum acknowledging the 30th anniversary of FMLA, President Biden noted several expansions of the employee protections in place, including leave that offers more flexibility for military personnel, increased resources for employees battling cancer, and supporting paid leave efforts by the states. Carriers will need to pay close attention to how lawmakers interpret and proceed with these recommended actions so they are prepared for the compliance updates that they could face.

Mary Trecek is the Associate Research Director, Workplace Benefits at LIMRA.