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Connecticut Employers: Is Short Term Disability Insurance Now Obsolete because of new CT Paid Family & Medical Leave?

January 21, 2022

Now that Connecticut’s Paid Family Leave (CT-PFML) has gone into effect as of January 1, 2022, many Connecticut employers are left to wonder if they should continue with Short Term Disability Insurance (STD) for their employees.  After all, CT-PFML provides employees with partial pay when taking leave to care for family members and/or their own serious health needs.  So, does STD still make sense?   Yes, but not quite as much as before.  And, should your premium and STD benefit be adjusted?

Since CT-PFML only offers a partial replacement of lost income, Connecticut employers must continue to provide STD insurance if they don’t believe the amount of CT-PFML is sufficient.  Consider the following three examples of how employers can use STD and CT-PFML together to benefit their employees:

Provide more Weekly Income than under CT-PFML

Under CT-PFML the current maximum weekly benefit is $780.  This amount will be adjusted as Connecticut’s minimum wage rises. If a Company’s existing STD plan pays a greater benefit, then CT-PFML is not a full replacement.  However, if the Company maintains its STD policy, then CT-PFML could pay the first $780 and the Company’s STD policy could pay the remaining amount of desired income.  The result could be the same for the employee at a lower cost to the Employer.  It is time to go back to your broker and see what they will do!

Maintain the Current Duration of the STD Benefit

CT-PFML provides income replacement for up to twelve weeks. STD plans typically offer benefits for up to 26 weeks.  For employers who want their employees to receive 26 weeks of coverage, they will need to maintain their current STD. 

CT PFML and STD could Cover Different Leaves

Under CT-PFML an employee may file a claim when taking time off to care for a family member.  This is simply not covered under an STD policy.  Therefore, whether the employer maintains an STD policy or not, this time off to care for family will be provided.    The only question is if the employee takes time off for this purpose, will they have anything left for themselves?  If the employer wants to ensure the answer is yes, than an STD policy still makes sense. 

An STD policy and CT-PFML can work together for the greater benefit of a company’s employees.  Perhaps instead of talking to their insurance brokers about cancelling an existing STD policy, Connecticut employers should ask their brokers if they are entitled to a reduced premium because of the supplemental nature of the STD policy going forward.  Being on the cutting edge of this issue only has an upside unless and until the law prevents this strategy.

Brody and Associates regularly advises management on complying with the latest state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.