State issues request for proposals for voluntary paid family leave plan

Details about the program have been scarce since it was tucked into the budget signed by Gov. Chris Sununu last June.

Calling all insurers. Please submit your bids to be the first in the nation to provide a statewide voluntary paid medical and family leave policy. There is no estimate of how many people will participate, but name your price for the next five years. Just respond by May 9 to the state of New Hampshire’s 54-page page request for proposals released on Monday.

“A statewide, private-market, truly voluntary paid leave plan does not exist in any other state, and New Hampshire is leading the way,” said Gov. Chris Sununu in a press release announcing the RFP. “After years of talk, we are finally moving forward with a viable paid leave product that is available to anyone who wants it and forced upon no one who does not.”

The release of the RFP comes just weeks after the Republican majority of the New Hampshire House overwhelmingly voted to repeal the plan before it starts. But that repeal bill faces a likely gubernatorial veto should it pass the Senate.

Details about the program have been scarce since it was tucked into the budget last June. Since there was never a standalone bill, it never had a public hearing, and administration officials didn’t testify at the repeal hearings either, though the state insurance commissioner did answer questions shortly before the House Labor Committee voted. But his answers, or lack thereof, failed to sway lawmakers.

As late as January, officials told NH Business Review that there was nothing in writing about the plan, even though in November and December a consultant billed the state 50 times for written work, for a total of $60,000 – information provided after NHBR filed a right-to-know request. (A request for the written work itself was still pending at deadline.)

Different from others

The RFP, released Monday, offers some details beyond what was spelled out in the law, but the basics are the same. The private plan would piggyback on a state-offered benefit to about 11,000 state employees. It would provide up to 60 percent of salary to take care a family member for up to six weeks.

Private employers can also sign on, and the state would give a tax break to them for half of what they contribute. Employees can also join individually at a premium capped at $5 a week, subsidized, if need be, by earmarking the insurance tax paid by the vendor for that purpose. Those plans would cover the employer as well, unless the company already provided short-term disability benefits.

New Hampshire’s plan differs markedly from the 10 states that already offer paid family leave. Those mandatory plans are paid for though some combination of employer and employee payroll contributions and sometimes a general fund subsidy. Everyone participates, making it easier to estimate costs.

In New Hampshire, the level of participation is a giant question mark, especially since no state has every tried such a program before. Thus nobody has any idea how much it is going to cost until there are some responses to the RFP.

Even then, comparing the cost of proposals will be complicated. The state employee portion is simple enough. The vendor just has to list the monthly premium as a percentage of salary for each year, starting in 2023, when then the program goes into effect. That accounts for 75 percent of the cost factor.

When it comes to private businesses – which accounts for 15 percent of the cost factor – the state lists 26 scenarios based on location, group size (ranging from 2 to 150), type of industry, expected participation, expected employee contribution, whether it includes short-term disability and the relationship to other paid time off. The RFP also has a place for 10 other factors used for rating.

If employees contribute, their premiums will be deducted out of their paychecks if the group size exceeds 50 participants. Payroll deductions will be optional for smaller groups, and those premiums will go into the NH Paid Family Leave premium fund, rather than directly to the insurer. Workers at large employers will have their jobs guaranteed if they take advantage of the program because of the federal Family and Medical Leave Act, but the Granite State plan offers no such protections for small groups and individuals.

Performance guarantees

As for individuals – who account for 10 percent of the cost factor – the bidders will have to provide premiums in 10 scenarios, based on wages, gender and age and another five possible rating factors. Those premiums will also go to the premium fund.

Individuals will also have to wait seven months before they can make a claim, in order to help prevent adverse selection (when only those who know they will need it take advantage of it.) The employers may impose a waiting period for up to that amount. State workers won’t have a waiting period, since all workers will participate.

There will also be differences in coordination of benefits. State workers won’t be able to use their benefits until they exhaust paid time off. Individuals, however, will be able to keep a week of paid time off.

Vendors will also be judged on non-monetary issues, such as experience, technical architecture, performance guarantees and service delivery. That will account for half of their bid score. Bidders have to provide the amount of staffing and how much of it would be based in New Hampshire, average turnaround times, the appeal process and fraud prevention measures.

The state wants enrollment data monthly and claims data quarterly and enough time to test the system’s functionality

As for performance guarantees, bidders are asked whether 95 percent of contact center calls will be answered within 30 seconds, or whether 98 percent of claim determinations would be made in five business days.

The state plans to advertise the plan to increase participation. A separate RFP will be let out for that purpose, but insurers were welcome to bid on that as well.

The state Insurance Department has said there is a lot of interest in the RFP. The first indication of that might come on April 11, when bidders submit questions, which the state will answer the following week.

The timeline doesn’t say how long it will take for the state to evaluate the program, but after it picks a tentative winner, the state will negotiate a final contract, with the intention of submitting it to the Executive Council in either June and July. After the contract is approved, then the vendor has two weeks to submit a filing to the Insurance Department. The plan is expected to start Jan. 1, 2023, but open enrollment is 60 days before that for individuals and might begin even sooner for groups.