New Hampshire adopts first-in-the-nation voluntary paid leave

The COVID-19 pandemic foisted paid leave into the public conversation. Federal programs such as the Families First Coronavirus Response Act (FFCRA) mandated periods of paid leave (short and long) for qualifying employees and offset the employer’s expense with a payroll tax credit. Ever since the FFCRA expired in December 2020, many states have debated enacting permanent, obligatory paid leave programs. In an attempt to balance the benefits of paid leave programs with New Hampshire’s more laissez-faire policy instincts, the state has adopted a first-in-the-nation voluntary paid leave program for companies and individuals alike.

How state’s new program works

The program relies on a combination of insurance, known as family medical leave insurance (FMLI), and tax credits. Using state employees as a risk pool (of which there are about 10,000), the New Jersey Insurance Department will solicit bids for FMLI and select an insurance partner to provide paid leave benefits under the plan. Employers and/or individuals will then pay premiums on the FMLI in the event family or medical leave is needed while a person is insured.

Employers participating in the plan (again, voluntarily) may offset the insurance premiums’ costs through business tax credits. The funding feature is intended to encourage employer participation, which itself will diversify the risk pool and ideally result in lower premiums.