SAW/RTW Showcase: Managing Claim Offsets

DMEC Staff@Work

No Double Dipping: How to Prevent Overpayment of Employee Benefits

Overpayment of Employee BenefitsBy Heather Luiz, CPDM

SVP, Absence Management
York Risk

New challenges are increasing the difficulties for employers that manage leaves of absence and disability benefits in-house. This is especially true when it comes to managing offsets associated with short-term disability (STD) benefits and paid family leave (PFL). Whether you call it “double-dipping” or managing offsets, these complex claim scenarios can create significant losses for employers due to overlapping state laws and company-sponsored benefits.

In the past, employers who wanted to better their odds at winning the war for talent — and score points with Millennials — offered company-sponsored STD plans and/or PFL. But today, some states are stepping in and requiring these benefits.

To date, California, New York, New Jersey, Rhode Island, Hawaii, and Puerto Rico require disability benefits to cover an employee’s own serious health condition. The PFL laws in California, New York, New Jersey, Rhode Island, Washington, the District of Columbia, and Massachusetts cover more turf, including the care of a family member, military exigency, or bonding. Paid family leave is on the rise, as 40% of states have proposed PFL legislation.

So what happens to employers who have a company-sponsored plan — say, for paid family leave — and they’re in a state with a mandated program? In theory, an employee could “double dip” by receiving benefits from the company plan and the state plan.

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