So here’s something fun: last week, Sen. Kirsten Gillibrand (D-NY) and Rep. Rosa DeLauro (D-CT) introduced the appallingly named Family and Medical Insurance Leave Act, which they’ve declared to be abbreviated as the FAMILY Act.
Can I start by saying that this really takes the cake as far as acronyms? There isn’t a “Y” to be found, and the subject of the bill is a Family and Medical Leave Insurance program, but they’ve flipped “Leave” and “Insurance” to spell FAMIL(y).
But in any case, I wouldn’t object strongly to a family leave benefit organized as a self-sustaining program and with carefully-structured benefits.
But this doesn’t.
You can read about the bill here, at Gillibrand’s web page, and read the full text of the bill here.
In short, the bill provides for benefits paid at 66% of pay, with a minimum of $580 and maximum of $4,000 pre month, for up to 12 weeks each year, for any circumstance in which an individual is eligible for FMLA leave — birth or adoption of a child, or care of a sick family member, or for one’s own medical needs. (* One thing I can’t figure out is whether the same requirement that employees have worked for 1 year and that employers have 50+ employees, that exists for the FMLA, holds true here, and if not — it only speaks of Social Security disability eligibility, whether that means that FMLA leave requirements are extended to short-service workers and small employers.)
The bill is funded, its promoters say, by a 0.2% payroll tax on employer and employee (no cap on wages). In fact, the bill itself indicates that any necessary funds beyond this payroll tax are to be paid directly out of the federal treasury.
Which raises a huge red flag — I couldn’t find any indication that the 0.2% +0.2% tax level was set based on actuarial studies, estimates of how many people take FMLA leave now and how many more would if it becomes a paid benefit. As far as I can tell, it was set to be a palatably-small level to enhance the bill’s support.
Is this tax level reasonable?
I looked at a couple other similar benefits:
QPIP – Quebec Parental Insurance Plan:
One year of benefits, split among the two parents: 18 weeks exclusively for the woman who gave birth, 5 for the biological father, and 32 for either parents, with the first 25/5 paid at 70% and the remaining 25 at 55%.
Exclusively for newborns or newly-adopted children. Disability benefits are funded through other programs.
Premiums:
Employees 0.559%
Employers 0.782%
Self-employed 0.993%
(* It’s not clear to me why the self-employed pay less than the employer + employee total, as their benefits appear to be identical. Perhaps in practice they actually receive less, so get a break in premiums?)
Ceiling (2014): $69,000.
Source: http://www.rqap.gouv.qc.ca/index_en.asp
New Jersey temporary disability:
2/3 average pay up to weekly maximum of $595. Maximum of 26 weeks.
Contributions:
Employee: 0.38% of pay up to a maximum wage base of $31,500/year. (*The state website says 0.0038% but this is a mistake based on the statement that the maximum annual contribution is $119.70.)
Employer: Varies from 0.10% to 0.75%, with same wage base. (No indicator of how the variable premium is determined; since this isn’t worker’s comp, I wouldn’t expect this to vary by industry.)
Benefits are paid after a one-week waiting period (but are then retroactively paid for this week). The person must be under the medical care of a doctor or other healthcare provider. For maternity, benefits are paid for 6 weeks after delivery, and begin 4 weeks prior to the due date.
Source: http://lwd.dol.state.nj.us/labor/tdi/tdiindex.html
The bottom line is that the proposed benefit isn’t directly comparable to either of these, but the smaller contribution is nonetheless smaller than the proportionately lower timescale of benefit payouts, especially when taking into account the very wide range of eligible payout situations.
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