Paid family and medical leave (PFML) is an issue that is catching fire in America today because of its profound implications for families’ financial security and well-being. Private disability income insurance offered by life insurers is the most common form of income protection for workers—allowing millions of American workers to maintain their income when a medical condition or the birth of a child keeps them out of the workplace. In 2017, the private employer-based system paid American workers approximately $4.6 billion in short-term benefits as they recovered from conditions that kept them from working, including those associated with pregnancy and the birth of a child. Approximately 47 percent of all full-time civilian workers are provided paid medical leave under their employer’s short-term disability plan.
The private marketplace is working; however, there is room to expand this important financial protection. Similar to the vibrant retirement savings system provided by employers that is incentivized by the federal government, incentives should be provided to expand short-term paid medical leave coverage by building on a private system that works well. Additionally, incentivizing employers to provide this safety net for their employees alleviates pressure on other government-run systems.
ACLI supports a role for private insurers to participate in federal and state PFML programs. A private solution for government required paid leave would enable employers to provide coverage either through self-funding, through private insurance or a combination of the two. This would enable programs to build upon existing paid leave, rather than creating new government-run mandated programs. ACLI also supports a tax credit for employers to provide these benefits and mitigate the financial impact to employers providing these new benefits to their employees. Private insurers have assisted states in administration of paid and protected family leave for decades. The life insurance industry needs a seat at the table during the PFML debates. Our expertise can help lawmakers design new programs that are run effectively, building on the successful foundation of private paid leave programs.
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