{"id":19123,"date":"2025-04-30T18:55:06","date_gmt":"2025-05-01T00:55:06","guid":{"rendered":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/?p=19123"},"modified":"2025-04-30T18:55:06","modified_gmt":"2025-05-01T00:55:06","slug":"illinois-paid-family-and-medical-leave-insurance-ugh-no","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2025\/04\/illinois-paid-family-and-medical-leave-insurance-ugh-no.html","title":{"rendered":"Illinois Paid Family and Medical Leave Insurance? Ugh, no!"},"content":{"rendered":"\n<\/head>

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Illinois state capitol; https:\/\/commons.wikimedia.org\/wiki\/File:Illinoiscapitol2.jpg<\/figcaption><\/figure>\n<\/p>

The state of Illinois is coming to the close of the legislative session.\u00a0 Some bills, like the Homeschool Act, have been put on ice.\u00a0 But the Paid Family and Medical Leave Insurance Program<\/a> bill has been given an extension to May 9th<\/a>, which, even though it has comparatively few sponsors and hasn\u2019t made it out of committee, I understand this extension to indicate that it has some level of support from top Democrat Senate leadership.\u00a0 Weirdly, it\u2019s in the Paid Leave Committee which apparently has all of three members<\/a> and only two bills for its consideration.<\/p>\n

This bill, very generally speaking, aims to create a Social Security-like leave benefit, and there are in fact several states which have had disability\/leave benefits for some time now, specifically, New York, New Jersey, and California.\u00a0 Those benefits had historically been meant to cover disabilities for up to 6 months, or until Social Security or company-paid Long-Term Disability kicks in, and at a rate similar to company LTD benefits, so something like 60% or 67%.\u00a0 In recent years those plans have added a maternity leave component, and these are funded with Social Security-like payroll taxes, up to a Social Security-like maximum, and have a Social Security-like maximum benefit.\u00a0 Since this is for any kind of disability and for maternity leave as well, you don\u2019t \u201cearn\u201d your benefit by contributing over the years; you get the same amount regardless of for how many years you\u2019ve been contributing.\u00a0 (This is from memory, so some of the particulars may have changed.)<\/p>\n

Which, in principle, is fine.\u00a0 The lack of maternity leave benefits causes hardship, all the more so because even under the best of circumstances, young couples struggle to have a large savings cushion. If a program is properly designed and the cost is appropriately calculated with sound actuarial assumptions, a maternity benefit would even be a good thing to implement at the federal level.<\/p>\n

But at the same time, a system which is too generous and lacks sufficient safeguards can become extremely costly; back in my days as an international retirement and benefits expert, the typical \u201ccase study\u201d was the Netherlands where, prior to a set of reforms beginning in the 1990s, disability benefits were so generous that as much as 15% of the total labor force<\/a> was receiving disability benefits.<\/p>\n

And, based on my read of the law itself, this is exactly what Illinois would be headed for, with two characteristics of the Illinois bill that put it at significant risk of being fiscally unsustainable:<\/p>\n

The program (that is, the state of Illinois) would pay 90% of pay, so the NY\/NJ\/CA motivation to return to work to get back on the payroll rather than losing 1\/3 of pay is not there.<\/strong><\/p>\n

And the list of eligibility reasons goes far beyond childbirth or serious illness, with minimal or even in some cases without any verification required.<\/strong><\/p>\n

Here are the details, straight from the bill\u2019s text<\/a>:<\/p>\n

The bill covers the following situations:<\/p>\n