Maryland is preparing to mandate employers to provide Disability and Paid Family Leave coverage to your employees under the Time to Care Act (TTCA). As a result of this act, business owners have the choice of contributing to the Family and Medical Leave Insurance State Plan or providing an approved private plan.
We receive a lot of questions from businesses on whether it makes more sense to contribute to the State insurance fund to provide coverage to employees, or to purchase a private plan from a carrier. We put together this post to help you navigate the complexities of the Time to Care Act. We hope this helps you make an informed decision on whether to stay private or proceed with the state plan. Here’s what you need to know about the Maryland Time to Care Act.
The Family and Medical Leave Insurance State Plan aims to provide income and job protection for Maryland workers during critical life moments. By offering up to $1000 a week for up to 12 weeks. Workers can take time off to care for themselves, care for a loved one, bond with a child, attend certain military-related events, or care for a family member for whom they are next of kin.
Employers stand to benefit from increased workforce attachment and greater labor force participation, particularly among women who often serve as primary caregivers in their families.
What Does This Mean for Employers?
The Maryland Time to Care Act represents a significant shift in the responsibilities of employers regarding Disability and Paid Family Leave coverage. Here are a few points to consider:
- Who’s Covered: All employees working IN Maryland, including part time employees. Contributions for employees start on date of hire but employees are not eligible to receive a benefit until they have worked at least 680 hours in employment in the State over the four most recently completed calendar quarter. The benefit is not tied to service with a specific employer.
- Timeline and Budget: As an employer, if you participate in the State Plan, you will need to start contributions on wages paid to employees starting July 1, 2025. However, benefits are not available to employees until July 1, 2026. That means you would be paying for coverage for 12 months before your employees can actually take advantage of it, allowing the establishment of funds from which benefits will be paid.
- Enticing Talent: While the minimum contribution requirement ensures compliance with the law, you have the option to contribute more than the mandated minimum, as a generous benefit to your employees. This can enhance your competitiveness in attracting and retaining talent by offering more robust benefits packages.
- Minimum Contribution Requirements: If you choose to participate the State Plan, employers are required to contribute a minimum of 50% of the designated contribution rate*. This is currently 9% of wages up to the social security wage base.
- Prices of private plans may vary above or below this rate, allowing employers an opportunity to offer the same benefit at a cheaper cost. However, employers are not permitted to deduct from employees more than they would be required to contribute to the State Plan.
- Impact On Current Plans: Current plans including salary continuation, self-funded STD, and paid parental leave policies will either need to be revised to comply with the regulations outlined in the Time to Care Act or may be maintained as a supplement to the mandated benefits. Salary continuation and self-funded plans used in lieu of the State Plan will likely be required to create a trust and post a surety bond to ensure solvency.
It’s not just Maryland who is adopting paid leave policies. Delaware has a similar law that has passed with payments starting in 2025 and benefits starting in 2026. The District of Columbia and New Jersey have already implemented comparable mandates, signaling a broader trend that businesses across the country should monitor closely. This means, if you also have employees working outside of Maryland, ensure you comply with those similar laws as well.
How Do Employers Ensure Adequate Coverage?
Effectively navigating the complexities of coverage in Maryland requires proactive engagement with your insurance carrier or broker. Here’s how to ensure you obtain adequate coverage:
- Engage Early: Start discussions with your broker or carrier well in advance of any regulatory deadlines to allow for sufficient time to assess options and make decisions.
- Assessment of Needs: Conduct a thorough assessment of your company’s specific needs and risks to determine the appropriate level of coverage required.
- Comparison of Options: Compare the benefits and costs of different coverage options, including private plans and the State Plan, to make an informed decision.
- Review Policy Provisions: Carefully review the provisions of policies offered by insurance carriers to ensure they align with your company’s needs and expectations.
- Regular Communication: Maintain open lines of communication with your insurance broker and carrier to stay updated on the latest developments and options available.
- Customize: Work with your broker to customize coverage to address the unique needs and demographics of your workforce, ensuring comprehensive protection.
- Educate your Employees: Provide clear and comprehensive information to employees about the new coverage available to them, including how to access benefits and the process for filing claims.
- Review: Conduct regular reviews of your coverage to ensure it remains adequate and relevant as your business evolves and regulatory requirements change.
- Plan for the Future: Consider long-term implications and potential future needs when selecting coverage options, ensuring flexibility and adaptability over time.
Contact PSA
While it may seem like a lot to take in, our experts are happy to help you navigate the complexities and changes that come with the Time to Care Act. If you have questions or if you would like to discuss the details of this article further, connect with John Rast at jrast@psafinancial.com to help you select the best option for your business.
*This rate is subject to change. A recent amendment to the law set February 1, 2025, as the date to finalize the contribution rate.
