Update Applicable to:

All Employers.

What happened?

The House introduced bill CS/CS/HB 721 – Paid Family Leave Insurance in February 2023, which has now been passed by both chambers and is awaiting signature.

What are the details?

This is a voluntary program, not a state requirement. Currently, life insurers in the state are authorized to transact health insurance, disability income insurance, excess coverage for health maintenance organizations and multiple-employer welfare arrangements but are not expressly authorized to issue paid family leave insurance.   Family leave guarantees originated with the Family Medical Leave Act of 1993 (FMLA), requiring covered employers to provide eligible employees job-protected leave for qualifying family and medical reasons.

The bill: 

• revises the definition of “kinds of insurance” to include paid family leave insurance,
• defines “paid family leave insurance,” 
• specifies requirements under which family leave insurance benefits may be provided, 
• requires insurance policies to specify details and requirements for covered leave reasons,
• specifies requirements for polices relating to benefit periods and waiting periods, 
• permits limitations, exclusions, and reductions for eligibility, and
• authorizes the Financial Services Commission to adopt rules. 

Effect of the Bill

The bill creates a regulatory structure for creation and sale of paid family leave insurance policies both as a stand-alone product, as a group insurance policy, and as a rider to a group disability income policy. Notably, the bill does not create a right to paid family leave benefits for employees not otherwise eligible under FMLA, but rather gives their employers the option to offer, and authorizes life insurers to transact, paid family leave insurance benefits.  The bill includes paid family leave insurance as a type of insurance product with life, health, property, casualty, surety, marine, and title insurance products. The bill defines paid family leave insurance as insurance issued to an employer to pay for a percentage or portion of the employee’s income loss due to: 

• The birth of a child or adoption of a child by the employee; 
• Placement of a foster child with the employee; 
• Care of an employee’s family member who has a serious health condition; or
• Circumstances arising out of the fact the employee’s family member is a service member on active duty or has been notified of an impending call or order to active duty.
  
  

For more information, please see the links below:

Bill Page 1; Bill Page 2 (Status: Passed/Enrolled 5/1/2023; Signed by Officers and presented to Governor on 5/16/2023)

What do employers need to do?

Employers should review the provisions of the bill, check the status of the bill to determine whether it has been signed as expected, and discuss the option to offer this new benefit to its employees.

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