How Private Insurance Paid Leave Bills Fall Short of Meeting the Needs of Workers and Families

Our new resource provides context for the emerging legislative trend of voluntary private insurance paid family leave bills and the shortcomings of this approach.
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In recent years, a wave of voluntary private insurance paid family leave bills has swept through the country, especially in Southern states. These bills, based on model legislation from the National Council of Insurance Legislators, allow private insurance companies to sell paid family leave policies to employers. Importantly, this approach does not require any employers to provide paid family leave, which means it does not guarantee access to paid leave for any workers. This type of legislation has already been passed in Virginia, Tennessee, Texas, and Florida, and is being considered by lawmakers in South Carolina and Kentucky during the current legislative session. Given the growing number of states enacting these policies, we conducted a deeper examination, revealing serious shortcomings that may hinder progress in expanding access to paid family leave, especially for the families who need it the most. 

Our new fact sheet, “Voluntary Private Insurance Paid Family Leave Bills,” provides context for this emerging legislative trend and features a side-by-side comparison of key differences between bills allowing the sale of private paid family leave insurance products and comprehensive paid family & medical leave programs that guarantee access to all families. 

While voluntary private insurance bills are not necessarily harmful, they are unlikely to meaningfully increase access to paid leave, especially for the lower-wage workers who need it the most. The passage of bills allowing the sale of paid leave insurance products may appear to address the issue, without significantly increasing workers’ rights or access to the benefit. There is not yet reliable data to demonstrate that large numbers of employers will choose to purchase paid family leave policies. In fact, low utilization of short-term disability insurance policies by employers across the South suggests that paid family leave insurance will likely not be widely purchased, leaving the majority of workers without access. In addition, the private insurance approach provides fewer protections for workers and may even contribute to discriminatory hiring practices. 

To substantially increase access to paid family and medical leave, the preferred, data-driven approach is structured as a social insurance program that shares costs and covers nearly all workers. By paying a small amount, typically similar to a cup of coffee each week, employers and employees can participate in a state-administered program that provides guaranteed benefits when leave is needed to care for a new child or address serious health needs. This approach has already been enacted in 13 states plus D.C. and is proven to support businesses by lowering costs and increasing recruitment and retention. A comprehensive approach especially supports small businesses, allowing them to stay competitive by offering a benefit that only large companies can usually offer. In fact, several states allow small businesses to participate in the program and provide paid leave to their employees without paying any premiums at all.

Paid family & medical leave contributes to improved parental and child health and greater economic security for families, fostering stronger communities. Additionally, by reducing turnover, enhancing productivity, boosting morale, and supporting small businesses, paid leave provides long-term economic benefits. No one should have to sacrifice a paycheck to take care of themselves or a loved one. Rather than a private, opt-in approach that only marginally increases access to paid leave, working families and small businesses need a comprehensive program that guarantees access to paid leave for all. 

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