Decision on Premium Rate for Paid Family Leave Benefits and
Maximum Employee Contribution for Coverage Beginning January 1, 2023
This Decision sets forth the Superintendent’s determination regarding (1) the premium rate for Paid Family Leave benefits for the 2023 calendar year, pursuant to Insurance Law § 4235(n)(1), and (2) the Risk Adjustment for the COVID-19 claims paid under Chapter 25 of the Laws of 2020.
Under New York’s Paid Family Leave program, all eligible employees in New York have been able to take time off, while still being paid a portion of their wages, to bond with a new child, to care for a family member with a serious health condition, or to handle personal matters arising from an immediate family member being called to active duty in the Armed Forces of the United States. Beginning in 2021, eligible employees will receive 67% of their average weekly wage, up to 67% of the statewide average weekly wage for up to 12 weeks of leave.
As provided by Insurance Law § 4235(n)(1), in a decision dated June 1, 2017, the Superintendent, in consultation with the Chair of the Workers’ Compensation Board, determined that paid family leave benefits coverage issued pursuant to Article 9 of the Workers’ Compensation Law (“Paid Family Leave benefits”) shall be community rated. Community rating ensures that all employees are similarly treated and are not subject to cost variations based upon age, gender, geographic location, or any other demographic factor.
Insurance Law § 4235(n)(1) provides that the Superintendent shall establish the premium rate for community rated family leave benefits coverage, applying commonly accepted actuarial principles. Specifically, the Superintendent shall, by September 1 of each year, publish the rate for the policy period beginning on the following January 1. The Superintendent shall also set the maximum employee contribution for Paid Family Leave benefits pursuant to Workers’ Compensation Law § 209(3)(b). The maximum employee contribution is the maximum amount a covered employer is authorized to collect from each of its employees to fund Paid Family Leave benefits. The maximum employee contribution shall equal the premium rate for Paid Family Leave benefits.
The people of the State of New York and other states have struggled under the impact of the COVID-19 pandemic since early 2020. This situation is persisting in calendar year 2022, albeit COVID-19 quarantine claims have been steadily decreasing as we proceed through the year. The pandemic has led to an overall reduction in the utilization of Paid Family Leave benefits, as well as a reduction in the number of New York State covered workers. The Department of Financial Services (“DFS”) is continuing to monitor the COVID-19 pandemic and its impact on Paid Family Leave claims.
2023 Premium Rate for Paid Family Leave Benefits and Maximum Employee Contribution
In determining the community rate for 2023, DFS has reviewed claims, demographic, financial and other Paid Family Leave benefits data for calendar years 2018 - 2021, and for the first six months of 2022 for the Paid Family Leave program in New York, consistent with actuarial principles. DFS also has reviewed claims and demographic data for New York’s disability coverage, as disability insurers are required to include Paid Family Leave benefits coverage as a rider to their disability policies. In addition, DFS has reviewed available data from other states with enacted paid family leave programs (New Jersey, California, Rhode Island, and other states which enacted paid family leave programs), adjusting for differences between the programs in those states and New York State’s Paid Family Leave program. DFS also has reviewed information and data from the New York State Department of Labor, the United States Census Bureau and other relevant sources.
To predict the Paid Family Leave benefits claims for the 2023 calendar year, DFS considered all relevant actuarial factors, including but not limited to:
- Paid claims experience data from the Paid Family Leave program in New York in calendar years 2018 - 2021, and in the first six months of 2022, with claim runouts through June 30, 2022, and historical experience data from similar programs in other states, with adjustments for differences in benefits and events that had occurred but were not yet reported.
- Paid claims experience data in calendar years 2020, 2021 and thus far in 2022 from the COVID-19 benefits under Chapter 25 of the Laws of 2020.
- Data analyzed separately by gender and separately for Bonding, Family Care and Military coverage included:
- Average claim frequency factors;
- Annualized increases in average claim frequency factors;
- Average weekly benefit factors;
- Distribution of claims by duration and average claim duration factors; and
- Average covered payroll of the population making payroll contributions to the program.
- Anticipated shift of claims in New York to Paid Family Leave benefits due to the more generous benefits available compared to typical employer-sponsored disability plans.
- Anticipated rise in utilization due to the increase in the amount of the New York State Average Weekly Wage (NYSAWW) in calendar year 2023.
- Anticipated additional benefits available in calendar year 2023 for siblings under the Family Care provisions of Paid Family Leave, and improved coverage provisions for domestic workers.
- Calculation of aggregate claims costs for newborn, adoptive, and foster care bonding, family care and military leave.
- Adjustment for commissions, premium taxes, administrative expenses, and profit.
The premium rate, like the benefit amount, is set as a percentage of an employee’s covered wage.
Thus, the premium paid by an employee depends on how much an employee earns: those earning less will pay a lower premium, and those earning more will pay a higher premium as they are eligible for higher benefits, up to the maximum Paid Family Leave Benefit for 2023 of 67% of the statewide average weekly wage. Employees whose income is at or above the statewide average weekly wage are eligible only for the maximum Paid Family Leave Benefit amount.
Accordingly, based on commonly accepted actuarial principles, the Superintendent has determined that the premium rate for Paid Family Leave benefits for coverage beginning January 1, 2023 shall be reduced by 10% compared to the premium rate applicable for calendar year 2022. The rate will be set at 0.455% of an employee’s wages each pay period up to and not to exceed an annual maximum employee contribution of $399.43. The 0.005% Covid Surcharge included in the rates for 2021 and 2022 to cover COVID-19 claims paid under Chapter 25 of the Laws of 2020 will not be included in the 2023 rate. DFS calculations predict the COVID-19 surcharge collected from 2021 and 2022 will be sufficient to cover 2023 COVID-19 claims paid under Chapter 25 of the Laws of 2020. If an employee’s contributions reach the annual maximum employee contribution of $399.43 before the end of the calendar year, the employee shall not be liable for any additional contributions for that year. Employers shall collect employee contributions consistent with this Decision.
All insurers offering Paid Family Leave benefits coverage in New York are requested to forward all Paid Family Leave benefits policy forms and rate submissions through the SERFF filing process. Policy forms and rate submissions are due October 1, 2022. Insurers are directed to the DFS website for submission instructions, the Model Rider, and the PFL checklist.
Dated: September 1, 2022