For many Minnesota employers, the first year of Paid Leave was about getting ready. There were deadlines to track, decisions to make, processes to set up, and lots of information coming to HR and leadership teams. Faced with all that, many organizations made the simplest choice: join the state plan and move forward.
Now that the program is in place, there is an opportunity to ask a different question: Is the solution we chose still the right solution for our organization?
That conversation matters because Minnesota Paid Leave has become a meaningful part of an employer’s overall benefits strategy. The decision can affect more than the premium you pay. It can also influence your total benefits spend, your HR team’s workload, how different benefits coordinate, and the predictability of future costs.
Here’s what you should be asking yourself today…
Look Beyond the Paid Leave Premium
One of the biggest opportunities we see is helping employers view Minnesota Paid Leave as part of their overall benefits package rather than as a standalone expense. A private plan may let you market other ancillary benefits at the same time. These may include dental, vision, life, short-term disability, and long-term disability. Depending on the organization and market conditions, savings in those areas can help offset some or even all of the new Paid Leave expense.
We saw this firsthand with one organization that expected its ancillary benefits costs to increase significantly with the addition of Paid Leave. By taking the broader package to market, we were able to reduce rates across several benefit lines. Instead of increasing, the organization’s overall ancillary spend decreased by thousands annually.
Another organization was facing roughly tens of thousands in additional costs under one scenario. After evaluating the entire program and going to market, the organization ultimately achieved a slight overall decrease.
Those outcomes won’t happen for every employer, but they are possible. They also demonstrate why it can be valuable to run the numbers before assuming the additional cost is simply something your organization has to absorb.
Consider the Administrative Cost, Too
Premium is only one piece of the equation. Paid Leave also creates work behind the scenes. HR teams may be responsible for responding to claims, verifying wages and eligibility, managing paperwork, and making sure Paid Leave coordinates appropriately with benefits such as short-term disability. That time has a cost, particularly for organizations where HR teams are already stretched thin.
A private plan can shift more of the administration to the carrier and create greater separation between HR and an employee’s individual leave situation. When Paid Leave and short-term disability are administered together, it can also simplify benefit coordination and help ensure employees receive the appropriate benefit amounts.
The right question, then, isn’t simply, “What does this plan cost?” It’s also, “What will this plan require from our people?”
Think About Predictability
Employers should also consider what they know about future costs. Some private Paid Leave plans offer multi-year rate guarantees. That can provide organizations with greater budget predictability and reduce uncertainty around what the program may cost in future years.
For a smaller employer, that stability can make annual budgeting easier. For a larger organization, even a relatively small rate change can represent a significant financial impact. This makes rate guarantees another important part of the evaluation. A slightly different rate today may look very different when considered across several years.
Five Questions Worth Asking
As employers look ahead, we believe there are a few questions worth putting on the table:
- Have we compared the state plan with private-plan alternatives?
- Are we evaluating Paid Leave on its own, or as part of our total benefits spend?
- How much administrative responsibility is our current approach placing on HR?
- How effectively are Paid Leave and short-term disability being coordinated?
- What level of rate stability and budget predictability does our current solution provide?
There isn’t one answer that will be right for every Minnesota employer. Organization size, workforce, existing benefits, administrative resources, and financial priorities all play a role. The important thing is knowing that there are questions worth asking.
If your Minnesota Paid Leave strategy was primarily about getting a solution in place for January 1, now may be a good time to revisit it. A conversation with your benefits advisor can help you understand the alternatives, run the numbers, and determine whether your current approach still makes sense for your organization.
Andrew McDonough, Benefits Consultant
