State vs. Private: The PFML Showdown

In this episode of Absence Minded, our team breaks down the real‑world differences between state-run and private paid family & medical leave programs and what employers should consider as new legislation rolls out across Maine, Maryland, and potentially Virginia.

Recorded on March 2, 2026

Enjoy the commentary from these two experts from The Partners Group, a leading resource in the absence management industry. You can listen to every episode on our website.

Brycie Wasson

Brycie has spent her entire career in absence and disability management. She began administering FMLA leaves for one of our nation’s largest retailers, and she soon advanced to oversee an absence and disability benefits program for a private financial services firm. She implemented multiple successful absence solutions, including harmonizing policy and practices, creating a formal ADA evaluation process, and integrating a leave management software solution. Brycie has been with The Partners Group since 2017.

Christine Hinnerichs
Christine has over 15 years of absence management and disability experience in the non- and for-profit sectors, as well as nearly 20 years of experience in HR. Her extensive background on the client side of absence management and disability helps her navigate and create solutions for unique client challenges. Christine has a BA in business administration from the University of Nebraska at Omaha. She earned her PHR Certification in 2006 and her Life and Annuities, Sickness, Accident and Health Insurance Producer’s License in 2021. Christine has been with The Partners Group since 2020.

Transcript

SPEAKER_01 0:10

Welcome everyone. Welcome back to Absence Minded. Today we're going to talk to you again about one of our favorite topics that you've probably heard us speak on before in basically all of our podcast episodes. We're going to talk to you today again about paid family and medical leave. So we we do have some exciting activity happening in the paid family and medical leave space and wanted to use that as kind of a jumping-off point for going back to a bit of a 101 refresher on the concept and considerations around going into a mandated paid family and medical leave state-run plan versus where allowable, going into or electing a private paid family and medical leave plan where we're required to participate, but we may want an alternative to participating in the state-run plan. So as a reminder, the state plan kind of means, or going into the state plan kind of means like this is the default approach. If I do nothing, when this program goes live, when I when it when the program begins the kind of contribution requirements and then ultimately begins administration of the program, my employees contact the state to apply for those benefits. That typically happens when we do nothing else. Boom. They call the state, they get their benefit through the state. That's the state plan administration. A private plan means where some states allow employers to participate and meet the mandates of their program, but through either a fully insured or a self-funded kind of equivalent plan that is run either by a disability insurance carrier, a third-party administrator, or in some rare super elite ninja cases, a self-administered private plan. So we wanted to talk about that today because we do have a couple of programs on deck, and some employers out there are in a good place to be thinking about this as they approach a couple of those programs. And then some exciting updates on a state that is on the verge of passing a mandated paid family and medical leave program. So we've got the next couple of programs on deck are Maine and Maryland. And most of most of you who are Maynards have have kind of already made your decision on state versus private plan for at least now, for at least initial entry into that plan that's going to be going live May 1st. But we still have some time for those of us who have populations in Maryland. So what we're first going to do today is talk to you about kind of that going back to that 101, the pros and cons of state versus private. And then we're going to give you a little bit more specificity around what is coming our way in Maryland. And then I'll be closing us out by talking to you a little bit more about what might be coming our way in Virginia. So Christine's going to kick us off, and we're going to start with some pros of going into the state plan.

SPEAKER_00 3:18

All right. So for our 101 lesson, as Brycey said it, I'm going to play the part of the state. And Brycey's going to talk about, and we use both of these terms interchangeably. I want you to know that it means the same thing. So a private and equivalent plan are the same thing. You're going to hear us use both of those terms throughout. Some states like the word private, some states like the word uh equivalent. But for the purpose of today, again, I'm going to I'm going to play the part of the state plan. And I'm going to, I'm going to talk about some of the pros of going with the state plan. It's a robust list of three pros that we have for going with the state. But sometimes this is just what makes the most sense for your organization. So when it comes to going with a state plan, the top pro that we look at is it is it is the simplest when it comes to setup. You know, if you're going to go down the path of implementing with a carrier, there's going to be a separate implementation process. There may be file feed considerations, there may be communication design considerations that all need to be a part of that process. If you're going to go with the state, it's a, this is what you get, and you don't throw a fit. It is the simplest when it comes to setup. The other thing that is typically or can be a pro of going with a state plan is the claim filing and processing may be more efficient. We're saying may as kind of a big qualifier there. Typically, we are seeing a little bit better experience with our private or equivalent plans when we're seeing claim filing and processing, but that may be a benefit there. And the last one that we see, and this will truly is the biggest, is we see more stability with premiums with a state plan. And let me elaborate on that just a little bit. So the state legislates a premium or payroll tax that you are going to deduct. Uh the split can vary. Sometimes it's a 50-50 split between employer and employee. Sometimes it's all employees, sometimes it's all employer. But the state legislates what that rate is going to be on an annualized basis, or sometimes even more even more extended periods than that. Sometimes we'll have a set rate for years at a time. Whereas a carrier is going to set a rate or a premium based upon demographics, leave incidence, expected usage, meaning that if you have a demographic where you are a very high user of leave and your employee base may be accessing PFML benefits more than average, you may have a premium that is higher than the state rate. And so going with the state can provide a little bit more price stability and stabilization as opposed to going down the carrier path. So, Brycey, those are our pros for me playing part of the state. What are what do you feel like are some of the pros of going with an equivalent plan?

SPEAKER_01 6:39

All right. And I I do like the term equivalent plan because it's a good reminder for all of us that when electing a private plan, it does basically have to look and feel exactly like the state's plan. Has to have the same provisions, same eligibility, same duration, same covered reasons, same amount of pay. Um it's just, you know, administered elsewhere and not at the state. So that's my favorite way to refer to a private plan. I would say that the that the potential pros of a private plan are for some of us the potential for cost savings. So Christine just went into the fact that these private plans are going to be more subject to general underwriting principles. We're not all gonna get a good deal on a private plan, but some of us are. There's a greater chance in most cases that things are going to go a little bit easier, a little bit smoother, and a little bit quicker when we are electing a private plan, especially one administered by a disability insurance company or a third-party administrator that has all of this experience backed up in administering plans like this in the past, versus when we go into state plans. They're typically administered by divisions who are bringing in a whole new staff, building new systems. It's new to everyone. There are exceptions to that. For example, Maine uh hired a third-party administrator to administer their state plan. And so they have elicited the help of AFLAC, who has done this in other states, who has done this in their own uh their own plan offerings. And so it may go a little bit smoother in Maine as far as the customer support that we can expect to see in the early days of those programs. But generally speaking, there's just a little bit more stability in the experience when you are electing a private plan. Um, and because these state plans tend to get pretty bogged down in kind of that go live rush, um the kind of timeliness of payment is something else that we we typically anticipate is a little bit smoother on the private plan side. The uh access to web-based tools for employees, for claimants, and us as employers is almost certainly going to be better in a private plan where those tools have have already been built. Um, and then, you know, there there can be some other bonuses like alternative payment methods for claimants potentially. We have an account service team when we have a third party or a disability insurance company administering our private plan that is accessible for things like claim escalations and troubleshooting systemic issues that we might be seeing. It is hard to catch the ear of, you know, someone on the state plan side who could actually make a difference for us. We've seen that in every state. They they are they are very hard to reach in the early days of their program. Their entire energy is focused on, you know, administering claims and getting payments out the door because they do tend to get backlogged right away. Um, and so we we we don't quite have the same access to somebody that can help on that side. Um, and then uh, you know, the uh another pro I'll talk about is that where we're having our plan administered by a third-party administrator, that can offer a really nice level of integration if that same administrator is also uh running our short-term disability plan or our short-term disability and leave of absence service. Um, it's just a better integrated experience for employees who can kind of have that one stop shop that that uh, you know, they call your plant administrator and they file their leave and their disability claim and their and their paid family and medical leave claim all in one call and they don't have to know what to ask for. Um, it just it happens a little bit more smoothly for them in an integrated way. So that can be a uh again on the experience side for the claimant, a much better experience, an easier process to follow. And then the last thing I'll cite is through private planning administrators, we generally have much better access to reporting, to be able to follow what is the utilization of this program by our population, which can help us understand, you know, how our how our subsequent renewal is going to go. And and you know, that can also help us understand as these programs start to evolve over time. We have the information we need, the reporting we need to see how do we need to evolve our own programs. Or, you know, is utilization higher in this one area so that we might need to target these these um supplemental programs that we're offering in this space or or whatever it might be, it it gives us kind of more information and data to be able to analyze uh how Leave is working at our organization.

SPEAKER_00 12:15

And that reporting Brycey too, and I'm I'm probably stealing some of your words, allows uh better identification for benefit supplementation. So I'm supposed to be playing the part of state, but here I'm gonna play the part of pro for equivalent or private plan, in that one of the biggest struggles that every single one of our clients has when they are navigating one of these new programs is if I'm going to allow my employee or am required to allow my employee the option to top off their PFML benefit with available, you know, PTO, sick, vacation, what have you, how much is that? And so when we go with these equivalent or private plans, you you almost always have visibility into those dollar amounts that they're receiving from PFML. So you can better identify the supplementation amount if you're gonna allow your employee to get to 100% of their wages.

SPEAKER_01 13:02

So that's that's a huge benefit for an equal, just more visibility to what this, what the the paid family and medical leave benefit looks like. Not to be confused with there's I haven't met a private plan administrator yet that will take on that supplemental payment task from you. So paying out that that top-up of PTO or or whatever benefit you know you might be topping up with, but having better access to the dollars that that plan is paying helps you, you know, it gives you the information that you need to make that supplemental benefit calculation on your end.

SPEAKER_00 13:37

Right. Okay, so so let's transition. I'm gonna I'm gonna talk a little bit about some of the cons of going with the with the state plan. And, you know, some some of our states do a better job than others. Um, we have some states administering PFML programs who are doing a level 10 very, very bad job. I'm not gonna name names, but I'll I'll tell you, you know, offline sometime. But some of the downsides of our of our state plan, and and this again, this is just an inverse of what I talked about initially, is we have a one size fits all approach. So um you don't have the ability as as you would with like a carrier partner to um customize communications that may fit your employee base or or demographic a little bit better. Some I I should give a caveat. There are some notifications that we are absolutely required by law to send, and we can't necessarily deviate from those, but there's some additional areas where you can typically customize communication that are going to go to your employees. Um, in some cases, as as Brycey talked about, depending upon your employee demographic, there can absolutely be a cost savings of going with the private plan. You may have a demographic that is not a demographic that is typically a high leave user group. And so going with a carrier, you might save some money. Um, you know, Brycey talked about this too, but in some states, we have claim processing and payouts that are tremendous. There was one point in time where we saw, I'm just gonna say it, it reminds, it it rhymes with Borgan, um, but they took upwards of six weeks to pay out those paid leave claims. That that is excessive. And that is really challenging for our employees who who are on a tighter budget. It's challenging for employers to know what should I do for this one month of time that my employees have been received, you know, have been approved to receive a benefit and they're getting no income whatsoever. Um, we can't we can't drive change with our with the state program the same way that we can with carriers. Just like Brycey said, when we've got carrier, we've typically got a dedicated uh client service team that is going to be there to help manage escalations, um, communication issues, payout delays, we don't have that same ability to have problems addressed when going with a state plan. So we're sort of subject to them working through their own process on their own timeline, if you will. And then if you do have a leave of absence administration with a carrier partner, and then you decide to go with the state for paid family and medical leave administration, we have a segmented experience for our employees. And what I mean by that is your employees are gonna have to call their leave of absence administration um carrier or TPA to get their leave of absence started, to have things like FMLA or state FML run, but then they have to contact another group. They have to contact the state in order to have their paid family and medical leave benefits processed. So that means two sets of paperwork, two sets, you know, two deadlines that you're working with. Um, you know, to just it's not an integrated experience. And it can get very confusing for employees. I truly do sympathize. These these programs are born at a very positive intent, but it is challenging for employees to know how to navigate all these different programs in play. So that's our downsides for the state, Brycey.

SPEAKER_01 17:22

Downsides are cons for cons of private plans. So uh I I mean, I think we've we've um already stated this and the inverse of this six times today, but they're often a higher cost than the state plan. For many of us, they they will cost a little bit more. And and you know, there are organizations out there, plenty, plenty of them, who are willing to pay a higher premium to provide the better experience for for all of us as stakeholders. Um, and so they often do come at a higher cost than the state plan. And and you know, they're not they're not capped at any state rate maximums. A lot of states will say, well, you know, in subsequent years, our rate will not go above this. And that will be the case until we have legislation that changes that rule. Um and that that's just simply not the case in a private plan. A private plan is again, that rate is going to be set based on underwriting methodology, based on the demographics and the utilization of your population. Um, and that and that will be the case every time you renew that plan. Um, and so if it's if it's not, you know, more costly at first, there's still a chance that your contributions down the road could exceed the state contribution rate. And then and then we're looking at having to make this decision based on cost all over again. Um, and so you know, in addition to that, there there is a little bit more administrative lift in some areas to having a private plan in place. There's often uh state mandated additional reporting requirements. Um, there is almost always requirements for interaction with the state to get your private plan reapproved on a certain cadence, to get initially approved on a certain cadence. There's usually costs associated with that approval process. So it's it's important to understand when opting out of a state plan what that really entails. Um, as kind of part of that decision-making process. Uh, and then the the other piece that I want to cite as a con, because it does tend to catch employers off guard, is is that this the state plan, when you go into the state plan, the state has access to all of the wage data that they need to make eligibility determinations and calculate that benefit amount because you're you're providing them as an employer with that wage detail, usually on a quarterly basis, usually through unemployment reporting. Your private plan administrator does not have the same kind of access to that data. And so there's usually a manual reach out for every employee at time of claim to you, where the carrier is saying, give us all the wages we need in a in a in a 12-month period, usually four quarters worth of wages, so that we can determine if this employee is eligible or so that we can calculate their benefit amount. That's like an invisible process that you don't participate in on the on the state plan side. On the private plan side, there's a manual reach out at time of claim for those wages. So that's just like kind of an administrative step that I do think has caught employers off guard that they don't realize that there's work up front that can be done to make sure that you have good access to that wage detail data so that when you get tapped for that at time of claim, it's kind of readily available to you. So I think it's a con that can be alleviated with some forethought and some operationalization. Um, and so if you if you are looking at going down this path, just kind of add that to your list of to-dos as you as you're going through your readiness journey.

SPEAKER_00 20:47

And I I think one thing that's worth calling out too is that no matter which path you choose. So if you say, hey, the state is better for me or equivalent is better for me, you you can go back and forth. Not it's not like a yo-yo. There, there's rules to it. Um, you know, some states have rules where if you opt to participate in a private plan, you have to stay in that private plan for one year. We have other states who have said three years. So you can't just move out of it all of a sudden if you have a bad experience. But there are points in time where no matter which decision you make, you have the opportunity to make an adjustment. So there it's not, it's not a forever decision, if you will.

SPEAKER_01 21:31

And that begs a good question. Like, how far in advance before a program goes live or before I might want to move, before I might want to make a different decision, do I need, do I need to be looking at this and making this decision? And I don't know, Christine, like I would say give yourself as much, as much time as possible, up to a year in advance, because that will give you the opportunity to go through a formal, a formal marketing of the private plan market. If that's the decision, if that's the direction. You you want to try to go. It is going to be so helpful for you to go to move through a formal process and carefully vet the market on their not only their rates, but their capabilities. How do they do this for you? Make sure you get all your questions answered. Find the right partner, the right partnership that fits with you and your culture. Um, I would, you know, try to give yourself as much time as possible. I'd give yourself as much time as you'd give yourself if you're considering changing disability carriers or, you know, leave administrators potentially. It's, it's, it is a very big decision. And um, you know, we we do encourage formal vetting of the market as you're weighing that decision.

SPEAKER_00 22:38

Absolutely. And I think, uh, Bracey, I'm gonna, I'm gonna segue into talking a little bit about Maryland. We can come back to some of these points to your point about um how much time should we give ourselves to make this decision? Because I want to talk a little bit about some of the timelines that Maryland has put in place already. So, Maryland to some of you may feel like it's pretty far away. Now, now again, um, Maine is our very next program on deck. Um, their benefits are gonna go live May 1st of 2026, just like Brycey said, a lot of you have already made a decision about hey, am I gonna go with a private plan? Am I gonna go with an equivalent plan? After Maine, we have Maryland, who has delayed their program definitely once, if not twice, at least twice, I think. Um, and their benefits are going to be live January 3rd, 2028, which again, it feels like it's far away, but it's really not. And you're gonna hear about why when I talk about some of these timelines. And then we have contributions starting in January 2027. So contributions are the premiums or the payroll tax that you're gonna have to deduct from your employees as well as um employers themselves, again, beginning in January 27. Um, and then even so again, keep that in mind. January 2027 is when we're gonna have to start collecting those contributions. Um, some things going on that state that I think are really interesting. If you are considering a private plan, so if you're considering a private plan for the state of Maryland, registration and declaration of intent. So a declaration of intent for a private plan is basically you employer just telling the state, hey, I'm not planning to go with the state Maryland plan. I'm planning to go with a private plan. Those are gonna be available in fall 2026, or at least that's what the state is telling us now. So again, that's that's coming up. Um, the declaration of intent is gonna tell the state that the employer will not be submitting any contributions to the state. So if you submit your DOI, you are not going to have to remit contributions to the state beginning in 2027. Um, however, you are going to be required to escrow those contributions from January 2027 until the private plan is approved in 2027. So you're not like off the hook. You still need to collect the contributions, um, store them away in an escrow account, but you're not necessarily going to be remitting them to the state, assuming that you go forward with applying for a private plan and you have that private plan approved. And then in summer 2027, employers can actually start applying for the approval of a private plan in the state of Maryland. So to Brycey's point of talking about timelines, if we're looking to submit a declaration of intent in fall 2026, we are absolutely starting to have conversations with our Maryland clients about what they want to do. Here's the plan that we recommend for you based upon your demographic, based upon the type of experience that you like to give your employees when it comes to leave. A couple other fun things going on in Maryland that I just wanted to share with you real quick. So we currently have a contribution rate, and I think this is important for us to keep on our radar of um 0.9% for Maryland, but they have um they've actually commissioned an updated actuarial report to make sure that the state of Maryland feels that that rate is still sound. And the state of Maryland has until May 1 to announce if a rate will be changed. So there is possibility that we may see a change in that rate. And that rate has the potential to change every November. So we have the opportunity once a year where there may be some adjustment to that. And it really comes down to the solvency of the plan. So are we collecting enough premiums to cover the benefit applications, the benefit approvals that are coming in? That's what goes into determining um if this if a rate is gonna stay or if it's potentially gonna be increased or not. So yeah, just some food for thought on Maryland. Wanted to give a couple quick hitters there. And then Brycey, who so we said Maine, we talked about Maryland, who should we be on the lookout for?

SPEAKER_01 27:02

Yeah, I I really want to highlight Virginia today because I'm starting to get excited about what we're seeing in Virginia. And I and I want to preface this by saying, you know, fight a horse to bet on, Virginia's gonna go this year. Um, but I'm gonna I'm gonna say that and then I'm gonna tell you that a bill has not been passed to the governor for signature. The governor has not signed a bill, the uh the funding has not been, you know, cemented in the budgeting process. So there's still plenty of opportunity for things to go awry and for this to change, but it it is looking good for Virginia this year. Um, and so I'm gonna tell you a little bit about what the what the program would be, and then I'll I'll give you a little bit more details on on like the kind of the the program's progression towards enactment here. So if this passed, um we would have a mandated paid family and medical leave uh insurance program in Virginia run by the Virginia Employment Commission. Uh premiums would begin right now in April 2028, with benefits becoming available in January 2029. Now, you know, everything that I'm telling you here is subject to change because, again, we've got a couple of bills moving their way through the legislative process that have not been finalized. Um, and so things like effective dates are very much subject to change uh because we don't have that final legislated language yet. Uh, but again, if this passes, it will allow for private plan options. So that's that's very exciting to the private plan community. Like other mandatory paid family and medical leave programs, this would provide partial income replacement uh for a worker who's out on leave and it's going to be funded through premiums that are paid by both employers and employees, like several of the states that have come before in recent days. This would cover both paid medical leave and paid family leave. Um, it would provide uh about 80% income replacement as the top threshold for lower income earners, but the weekly benefits will be capped at the state's uh average weekly wage. So nobody would get above that amount. Um, and and then um I'm gonna say it again. All of that is subject to change based on how these bills progress through the House and Senate. Um, so a little bit of an update on the on the likelihood of passage. So right now we have two bills in existence, which is common in the lawmaking process. The Senate has their version, this the House has their version, but they've passed both versions have passed their respective chambers and they've been swapped. So the House has the Senate's version, the Senate has the House's versions, and now they're they're they're being considered by the opposite chamber and ultimately would be consolidated into one bill that would go to the governor for signatures. So the fact that they have even made it to the swap, that they've made it this far, is is a really big deal and a good sign for enactment. Um, and then we had we had one big major outstanding issue, and that was really recently resolved, and that's the issue of funding for the startup costs, which are estimated to be somewhere in the realm of$116 million. Um, and so there was language from the House and Senate budget bills that was allowed to progress to conference, which is a step in the in the budgeting process that the state works through. Um, and that was allowed to progress following a uh February 22nd budget presentation to the General Assembly. So that signifies support by state leadership for this program. Um, and so so when we are kind of weighing the likelihood of success, I would say given the bill's ability to progress through both chambers processes to date, um, given a specific startup funding mechanism has been identified. So both the House and Senate uh bill language supports kind of a loan from the state treasury for the startup costs. And then given the the kind of public commentary that that Democrats see paid family and medical leave as a priority with a clear path this session, then I'd say overall likelihood is starting to look pretty high, especially after that February 22nd budget meeting. So we are keeping our eyes locked on Virginia um and and just excited to be kind of checking that state out this year. It's too bad that you and I can't do the red lines on those bills.

SPEAKER_00 31:38

I know, I know, I wish. It would be so fascinating. Next slide. Next slide. Well, I'm I'm feeling super relaxed and ready to sleep now. And by that I mean the exact opposite is the feeling I have in the moment. But um thank you everyone for tuning in. And this is a topic that consumes the overall majority of Bryce C and I's day, but we absolutely love it. Um, we love not only the elements of talking through the pros and cons of each approach, but we also love the element of digging into the law and really understanding what that means and how we apply those different provisions to our workplace. So thank you for tuning in. This was a big one, and we'll catch you on the next episode. Thanks all. Thank you. The information provided in this podcast is for general information and education purposes only. It's not intended to be and should not be construed as legal, financial, or human resources advice. While we strive to provide accurate and up-to-date information, laws and policies regarding leave management vary by jurisdiction and may change over time. Listeners should consult with a qualified attorney, HR professional, or relevant expert for advice specific to their situation. The views and opinions expressed by the hosts and guests are their own and do not necessarily reflect those of their employers or any affiliated organizations.