What happened?

On April 5, 2024. Governor Andy Beshear signed HB 179 into law, which creates a voluntary law authorizing “Paid Family Leave Insurance” as a kind of insurance under Chapter 304 of the Kentucky Insurance Code.

What are the details?

Key Bites:

• Allows employers to offer voluntary paid family leave insurance, supporting workers who need time off without imposing mandatory requirements on employers.

• Definitions: the law defines what is considered armed forces, child, and family member, among others.

• Coverage: options include voluntary, fully insured paid family leave benefits, which can be offered as a rider to a short-term disability or as a standalone policy.
  • If employers opt to provide this benefit, it offers temporary wage replacement for employees needing leave for reasons such as caring for a sick relative, bonding with a newborn, or attending to an injured military or first responder relative.
  • Additional reasons can be specified in the employer’s benefit plan.

• Benefits: The insurance code provides minimum standards for the insurance including the benefit duration (minimum least 2 weeks) and for the absence reasons.

• Absence reasons: The insurance may replace all or part of an employee’s income loss due to the following events:
  • Birth of a child or adoption of a child by the employee.
  • Placement of a child with the employee for foster care.
  • Care of a family member of the employee who has a serious health condition.
  • Circumstances arising out of the fact that the employee’s family member who is a service member is on active duty or has been notified of an impending call or order to active duty.
  • Care of a family member of the employee who has a serious health condition due to their military service.
  • Care of a family member of the employee who has a serious health condition due to their actions as a first responder.

• Contributions: it is voluntary, which means that no mandatory payroll contributions support a state program.

• Employers who are already providing paid family leave benefits via self-insurance models stand to gain as well. The voluntary insurance product permitted under the measure could lead to reduced and more predictable costs for them.

Business Considerations

• Employers should consider offering voluntary paid family leave insurance to support workers who need time off, as it does not impose mandatory requirements on employers. This means that no mandatory payroll contributions support a state program.
• Employers should familiarize themselves with the definitions, coverage, options, among the other provisions so they can better comprehend how this voluntary insurance works and the benefits it may offer them.
• Employers should consider providing this benefit as it offers temporary wage replacement for employees.
• Employers should consider the potential benefits of the voluntary insurance product allowed under the measure, especially if they are already providing paid family leave benefits via self-insurance models. This could lead to reduced and more predictable costs for them.

Source References

• KY HB 179

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