FMLA, PFML, and Disability Insurance: What are your options when you need to take care of yourself or a family member?
Caring for your health is tricky enough, but being a caregiver with a full-time job can strain your finances, job, and overall mental and physical wellbeing. A 2020 report from AARP states the number of adult caregivers rose from 16.6 percent in 2015 to 19.9 percent in 2020. This translates to over eight million adults caring for a family member or friend over the age of 18–and includes a significant increase in the number of adults caring for someone over 50 years old. That same report says 61 percent of those caregivers were employed while providing unpaid family care.
The possibility of becoming a caregiver becomes even more real as the current population ages. The United States Census Bureau found that the 65-and-older population has grown by over a third in the past decade. As the older population increases, the need for caregivers will, too.
Not every employer offers paid leave, so you may be forced to take unpaid leave to provide care for yourself or your loved ones. When that happens, you may find yourself living paycheck to paycheck, depleting savings, applying for public assistance, or asking for help from other family members. Finding ways to make up for lost income and avoiding additional debt can feel impossible. Seventy-five percent of employees said that if they became disabled and were unable to work, they would have trouble paying for basic living expenses after several months, and one-third of employees say they would have immediate trouble.1
Rest assured, there are options.
Many employers provide or offer disability coverage for working employees. This insurance protects your income if you are unable to work due to a covered accident or illness. Disability insurance can provide short-term coverage for up to one year and long-term insurance may last to the typical Social Security retirement age. Combined, these traditional forms of protection can yield an amount close to take-home pay that you can use to take care of your health conditions.
In addition to disability insurance, there are several other sources of income available to an employee if you are unable to work. For example, paid sick leave provided by the employer, workers’ compensation insurance (if you become injured or ill related to something that happened at the workplace), state disability programs, and Social Security disability benefits for those conditions that are more long-term in nature. These sources help you maintain a steady income stream to support yourself and you family when you need it most. However, there are other resources available if you aren’t ill, but need to take time to be a caregiver for a family member.
Family Medical Leave Act
Employees can ensure job security while dealing with severe health issues by using leave guaranteed by the Family Medical Leave Act (FMLA). The federal government implemented the FMLA in 1993 to help provide employees with job protection during a leave of absence to care for themselves, or a qualified family member, with serious health conditions for up to 12 weeks in a 12-month period. While the FMLA protects the your position, it does not provide you with income during the leave.
Paid Family and Medical Leave
Some states offer Paid Family and Medical Leave (PFML), which allows a limited amount of paid leave for medical or family reasons. This benefit is separate from FMLA or other employer-offered benefits. While some states offer both Paid Family and Medical Leave, some only offer one or the other. California, New Jersey, New York, and Rhode Island have all added Paid Family Leave in addition to their respective state-sponsored disability insurance plan options. The state disability plan helps you take time to care for yourself, while the paid family leave plan gives you the option to take paid leave to care for family members, welcome a new child, or prepare for active military duty.
Each program is unique regarding who is eligible, how long benefits are paid, the amount of benefit paid, and premium contribution amounts for employers and employees. Programs are also capped at certain salary levels, providing high salary replacements to low wage earners (in some cases over 100 percent) and low salary replacements to middle or high wage earners (as low as 40 percent).
PFML is a popular topic of discussion for Democrats and Republicans alike. Everyone agrees that it’s needed but finding consensus of how to fund these expensive benefits is a challenging task. While everyone is watching to see how Washington state’s program fares (the first state PFML program, benefits started paying 1/1/2020), legislation is being developed and introduced by many other state legislators. These bills hope to provide working employees with paid leave funded through employer and employee contributions.
Some believe the solution is to provide a uniform federal program. While many questions remain unanswered, knowing the landscape of benefits in your state is the key to properly protecting your income. And while your state leave benefits are being debated or refined, know that disability insurance remains the number one option for income protection for working Americans, and it will continue to be an important part of any future solution.
Click this link to learn more about the differences between FMLA, PFML, and disability insurance.
1LIMRA: Facts from Limra-2019 Disability Insurance Awareness Month; https://www.limra.com/en/newsroom/industry-trends/2019/disability-insurance-awareness-month–only-20-of-consumers-own-disability-insurance-despite-almost-half-saying-they-need-it/