NH paid leave contract approved. Some Republicans are skeptical. Here's how it works.

One year after the New Hampshire Legislature added a paid family and medical leave program to the state budget, the state has found a partner to launch the plans.

Officials with the Department of Administrative Services and the Department of Employment Security have selected MetLife, a national insurance company, to set up and administer the new plans. On Wednesday, the New Hampshire Executive Council cleared the final hurdle for the program, approving the $6.16 million contract. The program is set to launch in January.

State officials are billing the program – which uses a voluntary, opt-in structure – as a tool for New Hampshire businesses to recruit workers and compete with other states by offering an attractive new benefit.

“The PFML plan is a first in the nation voluntary plan that uses the state’s purchasing power and tax expenditure authority to provide advantageously priced PFML insurance for NH employers and employees of businesses of all sizes,” wrote Charlie Arlinghaus, commissioner of the Department of Administrative Services, and George Copadis, commissioner of the Department of Employment Security, in a joint letter to the council.

“In short, paid family and medical leave can significantly improve employees’ lives and businesses’ bottom lines,” they added.

The new contract represents the next phase for a policy that has been a flashpoint in the state for more than four years. Democratic candidates for governor Molly Kelly and Dan Feltes each made paid family leave a centerpiece of their campaigns against Gov. Chris Sununu, a Republican.

Democrats favored mandating the program for all state employees in order to create a bigger risk pool and reduce premiums; Sununu opposed the mandatory approach, arguing businesses and employees should be able to refuse paying the premiums. The present program, passed by Republicans, does not mandate participation in the private sector.

Some state Republicans have also been critical of the program. In April, the Republican-led House passed a bill to repeal the program, a year after voting for its creation in the budget. The Senate later voted down the repeal. Fiscal conservatives have raised concerns about the creation of an ongoing program.

On Wednesday, the council approved the contract unanimously and without discussion.

What is covered and how it works

Under the contract, MetLife will receive the money over the next five years to set up a paid leave program that automatically covers all of the state’s 10,000 employees. That program will serve as a base risk pool to allow the insurer to create plans to provide paid family leave insurance to private businesses and employees, state officials say.

Funding for the program comes from the state’s general fund. The state will create a “premium stabilization trust fund” to keep those costs down.

The benefit will pay out 60 percent of an employee’s wages for up to six weeks, according to the department. It will cover events including the birth of a child, serious health conditions of the employee or a family member, adopting or foster parenting a new child, and foreign deployment in the armed services.

“The state, I think, has a wonderful partner in MetLife,” said D.J. Bettencourt, deputy commissioner of the New Hampshire Insurance Department, who has helped oversee the program. “It’s a large, well-known company. They’re familiar with these types of programs, and they’re going to have the staff and resources to make it a success.”

The program appears in differing forms for public and private employees. State employees will receive the benefit without the need to negotiate it into their contract, a process that has proven fraught in recent years. But unlike the paid family and medical leave plans for private employees, the plans for state employees will not include coverage for the employee’s own health conditions. State employees already have personal health coverage through paid sick leave, which is negotiated into their contracts.

In the coming months, MetLife is also tasked with developing plans for employees in the private sector. Under the state’s program, companies can choose to participate, and those that do will get 50 percent of their costs reimbursed in the form of a tax credit against their business enterprise taxes.

The plans will differ based on whether the employers are “large,” consisting of 50 employees or more, or small.

Large employers will have the ability to customize how the plans are paid for and what benefits they offer through direct contracts with MetLife, according to the state. They can adjust the length of coverage – up to 12 weeks – and the percentage of wages that are offered to employees on leave. And they can determine whether the premium cost will be shared with the employee, paid for by the company, or paid for entirely by the employee.

Smaller companies will pay directly into the premium stabilization trust fund.

Meanwhile, employees whose workplaces do not participate in the new program – or self-employed workers – will be able to sign up individually, and also pay a premium into the fund. Those premiums are capped at $5 per week.

MetLife, a New York-based company, is best known as the largest life insurance company in the country. Its area of expertise most relevant to New Hampshire’s program is with short-term disability insurance, Bettencourt said.

The state chose the insurance company out of two total bids; the other bidder did not meet “the minimum requirements for acceptance,” Arlinghaus said.

On Wednesday the Executive Council also approved a $1.94 million contract to market the paid family leave program and carry out research through 2025. That contract was awarded to Mason Marketing in Penfield, New York.

With the contracts approved, that outreach effort will be necessary to bring companies on board with the program and get plans up and running by January, Bettencourt said.

“I think you’re gonna see over the next seven months or so, whatever is left in the year, a lot of promotion,” Bettencourt said. “A lot of work by MetLife and the marketing firm to get the word out about the program.”

Bettencourt said the new program could help even the playing field for New Hampshire businesses.

“The large employers in the southern tier are having to compete with Boston,” he said. “And a lot of those (Massachusetts) companies either offer a very generous paid leave plan or they have a state run program down in Massachusetts as well. So this gives them the opportunity to compete with that market.”

Councilor Joe Kenney, a Wakefield Republican, said he supported the program despite the financial viability concerns among some members of his party.

New Hampshire “is small enough and nimble enough to take on a kind of quasi pilot program to see where a program like this could go,” he said. “We’ll see how it goes. We hang onto the good things and let the bad things go.”

This story was originally published by New Hampshire Bulletin.

This article originally appeared on Portsmouth Herald: NH paid leave program contract approved. Here's how it works.