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Initial Report on Paid Family Leave COVID-19 Risk Adjustment Pool


Background

Chapter 25 of the Laws of 2020 established that employees subject to a mandatory or precautionary order of quarantine or isolation due to COVID-19 would be eligible for sick leave, disability benefits and paid family leave benefits.

The law required the Department of Financial Services (DFS), in consultation with the State Insurance Fund (SIF) and the Workers’ Compensation Board (WCB), to establish a risk adjustment pool to stabilize members’ claims pursuant to the law in order to protect insurers from disproportionate adverse risks. Under the risk adjustment mechanism, 100 percent of COVID-19 claims paid by insurers would be recouped over a period determined by DFS. Also, any insurer incurring disproportionate losses above the threshold limit of greater than 20 percent of the company’s surplus could be supported, if required by the superintendent, by other insurers, including SIF, in a proportion to be determined by the superintendent. (11 NYCRR 365.0)

Section 16 of the law requires DFS, in consultation with SIF and WCB, to issue an initial report assessing the risk adjustment pool established under the law. Specifically, the report must include:

  • the total number of claims filed pursuant to this section for (i) family leave benefits, and (ii) benefits due to disability, as a result of a mandatory or precautionary order of quarantine or isolation due to COVID-19;
  • the aggregate amount of paid family leave claims and disability claims;
  • the total amount of the claims paid for out of the risk adjustment pool;
  • the threshold limits established by DFS; and
  • any other information the superintendent deems necessary to provide to the legislature.

COVID-19 Claims Experience

As of 11/30/2021, the aggregate amount of the paid family leave (PFL) claims and claims for benefits under the disability benefit law (DBL) paid under Section 16 of the law was $11,703,435 (PFL = $6,397,467, DBL = $5,305,968).

PFL only:

 

2020

2021

Unclear/
Missing

Grand Total

Count of Claims with PFL Element 2,100 6,192 1 8,293
Total PFL Claims Paid $2,183,047 $4,213,498 $922 $6,397,467

DBL only:

 

2020

2021

Unclear/
Missing

Grand Total

Count of Claims with PFL Element 2,100 6,192 1 8,293
Total PFL Claims Paid $2,183,047 $4,213,498 $922 $6,397,467

To recoup amounts of COVID-19 claims, a surcharge of 0.005% was added to PFL premiums in 2021 and 2022. If the amount of actual COVID-19 claims differs from the amount of the surcharge, DFS will adjust future premiums accordingly.

As noted above, DFS determined that any insurer incurring disproportionate losses above the threshold limit of greater than 20 percent of the company’s surplus could be supported, if required by the superintendent, by other insurers, including SIF, in a proportion to be determined by the superintendent. No insurer incurred losses exceeding that limit, and no money was paid out of the risk adjustment pool.