implementing paid family and medical leave insurance: connecticut presentation by: sarah jane...
DESCRIPTION
The United States versus the rest of the world The United States: ◦Only advanced economy without paid maternity leave ◦One of a handful without paid paternity leave or temporary disability leave ◦Only high wealth country without any form of paid leave at all 5 states currently offer Temporary Disability Insurance: California, New Jersey, Rhode Island, New York, and Hawaii ◦3 states also cover family caregiving: California, New Jersey, and Rhode Island More than a dozen states and the District of Columbia introduced paid family and medical leave insurance bills in 2015TRANSCRIPT
Implementing Paid Family and Medical Leave Insurance:
ConnecticutPRESENTATION BY:
SARAH JANE GLYNN, CENTER FOR AMERICAN PROGRESSAND JEFFREY HAYES, INSTITUTE FOR WOMEN’S POLICY RESEARCH
ADDIT IONAL RESEARCH SUPPORT BY: GAYLE GOLDIN, CONSULTANT
SARAH FLE ISCH F INK, NATIONAL PARTNERSHIP FOR WOMEN AND FAMIL IES
SHERRY LE IWANT, A BETTER BAL ANCEAND VICK I SHABO, NATIONAL PARTNERSHIP FOR WOMEN AND
FAMIL IES
What is Paid Family and Medical Leave?
Paid family and medical leave insurance provides wage replacement when workers need time off to:
Care for a new babyCare for a seriously ill family memberAddress their own serious health condition
The United States versus the rest of the world
The United States:◦ Only advanced economy without paid maternity leave◦ One of a handful without paid paternity leave or temporary disability leave◦ Only high wealth country without any form of paid leave at all
5 states currently offer Temporary Disability Insurance: California, New Jersey, Rhode Island, New York, and Hawaii
◦ 3 states also cover family caregiving: California, New Jersey, and Rhode Island
More than a dozen states and the District of Columbia introduced paid family and medical leave insurance bills in 2015
Why Paid Family Leave Insurance?
Economic benefits to workers and economy◦ Increased likelihood of labor force participation
Health care benefits ◦ Breastfeeding, vaccinations, child well-being◦ Reduced stress
Anti-poverty measure, reducing the risk of:◦ Bankruptcy, ◦ Job loss, ◦ Having to rely on benefits like SNAP and TANF
What do people currently do in CT when they have a health crisis or new baby?◦ 74%of Connecticut children – 550,398 children – live in households where all parents work ◦ Nearly 777,000 people above the age of 60 live in Connecticut
Simulation ModelDeveloped in early 2000s by IWPR and economists at UMass-Boston, Albelda and Clayton-Matthews 2000 FMLA Survey from Department of Labor Current Population Survey Annual Social and Economic Supplements
Updated in 2014-2015 with funding from the Department of Labor (WB & OASP) 2012 FMLA Survey collected for DOL by Abt Associates American Community Survey
FMLA Survey used to estimate worker leave taking decisions when a qualifying event occursACS used as source of local labor market information
Simulating Use of Paid Leave Program and Employer Paid Leave
Policy Scenarios for Cost Modeling
Model Summary Benefit Level Eligibility
1 Task Force ProposalConnecticut FMLI Taskforce report for up to 6 weeks of FMLI.
Two-thirds of average weekly earnings up to a maximum benefit of $1,000 per week.
A worker must have earned at least $9,300 in the base period.
2 Legislation IntroducedBased on Connecticut 2015 H.B. 6932 for up to 12 weeks of FMLI.
100 percent of average weekly earnings up to a maximum benefit of $1,000 per week.
A worker must have earned at least $9,300 in the base period for an employer with 2+ employees.
3 Sliding Scale Benefits Sliding scale benefit formula to provide 12 weeks of FMLI.
100 percent of first $385 per week in average earnings, 80 percent of amount over $385 up to $769 per week, and 66 percent of higher weekly earnings.
A worker must have earned at least $5,050 (500 hours at $10.10/hour)in the base period for an employer with two or more employees.
4 MA Benefit Calculation 6 Weeks
Sliding scale benefit similar Massachusetts S. 1008 for 6 weeks of FMLI.
95 percent of first $231 per week in average earnings, 90 percent of amount over $231 up to $385 per week, 80 percent of amount over $385 up to $615 per week; and 66 percent of higher weekly earnings over $615 per week up to a maximum weekly benefit of $1,000.
Worker eligibility based on 1,000 hours in the base period.
5 MA Benefit Calculation 12 Weeks
Sliding scale benefit similar Massachusetts S. 1008 for 12 weeks of FMLI.
Same as Model 4. Same as Model 4.
Total Number of Leaves Taken Annually
Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.
Current PolicyTask Force
ProposalLegislation Introduced
Siding Scale Benefits
MA Benefit Calculation 6
Weeks
MA Benefit Calculation
12 Weeks(Baseline) (Model 1) (Model 2) (Model 3) (Model 4) (Model 5)
Own Health 170,928
180,470
182,544
181,608
181,939
177,073
Maternity & Bonding
45,152
44,367
45,955
44,025
44,521
46,356
Family Care
71,882
71,624
72,522
73,223
73,038
69,728
Total 287,962
296,461
301,021
298,856
299,498
293,157
Change --
8,499
13,059
10,894
11,536
5,195
Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.
Annual Number of Leaves Claiming Benefits
Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.
Task Force Proposal
Legislation Introduced
Sliding Scale Benefits
MA Benefit Calculation 6
Weeks
MA Benefit Calculation 12
Weeks(Model 1) (Model 2) (Model 3) (Model 4) (Model 5)
Own Health
73,248
74,973 78,209 75,418 70,924Maternity & Bonding
20,692
22,727 22,590 20,328 21,197
Family Care
3,781
3,931 4,438 3,799 3,394
Total
97,721 101,631 105,237 99,545 95,515
Cost of BenefitsTask Force
ProposalLegislation Introduced
Sliding Scale Benefits
MA Benefit Calculation 6
Weeks
MA Benefit Calculation
12 Weeks(Model 1) (Model 2) (Model 3) (Model 4) (Model 5)
Own Health ($M) $192.0 $354.7 $334.1 $225.4 $292.7Maternity & Bonding ($M) $38.8 $80.0 $77.1 $42.5 $68.7Family Care ($M) $3.8 $5.7 $6.4 $4.1 $4.8Total Benefit Cost ($M) $234.6 $440.3 $417.6 $272.0 $366.3
Administrative (5 percent, $M) $11.7 $22.0 $20.9 $13.6 $18.3Total Cost ($M) $246.3 $462.4 $438.5 $285.6 $384.6Cost, Percent of Total Earnings 0.29% 0.54% 0.51% 0.34% 0.45%Cost, Percent of Sliding Scale 31% 58% 55% 36% 48%
Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.
Two Sources of Administrative Cost Estimates
1) ESTIMATED BENEFIT COSTS FOR WASHINGTON HB 1273 (2015) AND CALCULATED ADMINISTRATIVE COSTS FROM FISCAL NOTE AS A PERCENTAGE OF BENEFIT COSTS
2) PROJECT TEAM OBTAINED ADMINISTRATIVE COSTS AS A PERCENTAGE OF BENEFITS PAID FROM RHODE ISLAND DEPARTMENT OF LABOR AND TRAINING
2014 (Year 1 for TDI & TCI) 5.3 percent2005-2014 Average 4.6 percent
Flat and Sliding Scale Contribution Rates
Based on a request from the working group, two methods were used to calculate the amount of income to self-fund FMLI on a sustainable basis.Flat rate based on TOTAL EARNINGSSliding Scale Contributions Based on Workers Annual Earnings 0.0 percent on annual earnings below $20,0000.6 percent on annual earnings of $20,000 - $39,9990.8 percent on annual earnings of $40,000 - $74,9991.0 percent on annual earnings of $75,000 or more
Program IncomeANNUAL PROGRAM INCOME FROM SLIDING SCALE (IN MILLIONS 2017 $s)
Annual IncomeQuarterly
Income
Private Wage & Salary $684.3 $171.1State/Local government $98.3 $24.6
Self-employed $51.0 $12.7
Total $833.6 $208.4
Source: IWPR Analysis of 2014 American Community Survey.
Notes: Includes individuals employed in Connecticut. Earnings were adjusted for inflation of 1.5 percent per year between 2014 and 2017.
BASED ON TOTAL ANNUAL EARNINGS (IN MILLIONS 2017 $s)
Total Earnings
Annual Income (0.54
percent)Quarterly
Income
Private Wage & Salary $79,603.9 $429.9 $107.5State/Local government $11,324.4 $61.2 $15.3
Self-employed $6,008.8 $32.4 $8.1
Total $96,937.1 $523.5 $130.9
Source: IWPR Analysis of 2014 American Community Survey.
Notes: Includes individuals employed in Connecticut. Earnings were adjusted for inflation of 1.5 percent per year between 2014 and 2017.
Percent of Leaves Receiving NO COMPENSATION
Current Policy
Task Force Proposal
Legislation Introduced
Sliding Scale Benefits
MA Benefit Calculation
6 Weeks
MA Benefit Calculation
12 Weeks(Baseline) (Model 1) (Model 2) (Model 3) (Model 4) (Model 5)
Overall 24.6% 16.2% 16.4% 16.1% 16.4% 17.1%Main Reason for LeaveOwn Health 25.1% 15.7% 16.1% 15.6% 15.7% 16.6%Maternity & Bonding 23.6% 7.7% 7.4% 5.7% 9.0% 7.9%Family Care 24.3% 22.9% 22.8% 23.7% 22.7% 24.7%
Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.
Ongoing Administrative Costs•Roughly 120 employees are likely to be needed when the program is fully operational.
•It is important to consider that staffing will not start at 120 employees, but rather be a gradual increase over time as claims increase.
•When fully staffed, the annual costs for salaries and benefits will be $18,528,207.
One Time Startup Costs Each of the cost simulation models outlined in this report includes an additional 5 percent of benefit payments to cover administrative overhead. However, regardless of the model selected, the fund will have one-time start-up costs in addition to the ongoing administrative expenses. In total we estimate the initial startup costs at approximately $13.6 million. The estimated start-up costs include:
Initial technology development including hardware, software and programing estimated at $7,725,099
Salaries and benefits for additional employees involved in the initial planning and training estimated at $4,729,174
Overhead and capital needs including office space, phone lines, and computers for staff estimated at $776,700
Initial outreach and education efforts to raise awareness of the program estimated at $340,000
Important Consideration for Policy
Eligibility ◦ Low eligibility threshold to ensure most vulnerable workers are covered
Inclusiveness ◦ Should cover all workers in the state
Length of Time ◦ No less than 12 weeks
Benefit level◦ Wage replacement should be high enough to allow for program participation
Contributions ◦ Employer, employee, or both
Administration ◦ State run program is preferable