State 2023 legislative agenda includes paid leave, benefits 

Most farmers will tell you that January and February are bad planting months. Not so with state legislation. The start of a new year sees hundreds of bills introduced every day, and 2023 may produce a bumper crop. All 50 states will convene their legislative bodies. Employers should understand three major points about the legislative cycle: process, focus and actions.

Process: How it works

You may recall the Schoolhouse Rock cartoon, I’m Just a Bill. The setting was Capitol Hill, but the theme also applies to states. To become law, a bill typically must endure hearings, amendments, fiscal reports, political tensions, other analyses and two floor votes (except Nebraska, which is unicameral).

Absent a special session, most state legislatures are done by July 4; Virginia’s session is a mere 30 days. Some states (like California, Illinois and New York) have sessions lasting two years; Puerto Rico’s current session is four years (2021-2024). Few bills make their way to the state governor for signature. In 2023, at least 40 states have unified control (legislative majorities and the governorship belonging to one political party). In these states, expect the governor’s pen to be poised and ready.

Bottom line: Even with unified control, most bills do not survive the threshing and winnowing stages required before a bill gets to the governor’s desk. So early action is usually unwarranted.

Focus: Key areas of interest for employer benefits

With so many seeds planted, what crops are worthy of attention? These health, benefits and insurance areas of pending legislation are noteworthy:

• Paid leave. We could see two or more states join about a dozen others currently mandating paid family and medical leave (PFML). Illinois and Minnesota top the list, but more than 10 other states have bills pending, including Indiana, Missouri, Oklahoma, Texas and Virginia. Key employer-friendly designs include a workable, equivalent private plan (fully insured or self-funded), a long runway before implementation, reasonable contribution rates, preemption of local laws and applicability based on state (not national) employee counts. Mandatory accrued paid sick time is also on the agenda in at least eight states this year, including Georgia, Hawaii and Kentucky.
• Prescription drugs (Rx). As in recent years, state legislators will likely focus on pharmacy benefit managers (PBMs) that work with plan sponsors to provide Rx coverage. Areas of legislative interest include:

─    Specialty and preferred network limitations

─    Mail-order Rx restrictions

─    Mandatory pharmacy reimbursements (including minimum dispensing fees)

─    Rebate application requirement at the point of sale

─    Third-party cost sharing assistance application to plan deductibles and out-of-pocket maximums (subject to an exception for HSA-eligible high-deductible health plans)

• Telehealth. Several states (like Florida, Montana, South Carolina and Wyoming) are looking to make it easier to provide services across state lines by expanding licensing reciprocity and joining various interstate compacts, particularly related to mental health. A few states (like Florida, Kansas and Utah) are considering limitations on telehealth related to audio-only visits and online prescribing. Employers typically support greater use of telehealth as long as a state does not require provider payment parity with in-person services.
• Insurance coverage mandates. Every year, states enact laws requiring fully insured plans subject to their laws to cover certain services. Fertility treatments and abortion-related services are prevalent in this year’s crop of bills.
• Long-term care (LTC) insurance. To date, no state has followed Washington’s lead in requiring most residents to obtain adequate coverage or pay for it through payroll deductions. Several states are considering individual state tax credits or deductions for residents who purchase LTC insurance.

Bottom line: Just as corn, soybean, barley, oats and wheat production help make the US one of the world’s breadbaskets, so too employers should focus on the five major issues above.

Actions: What employers can do

When plants emerge from the ground, it’s time to take action. Farmers water crops and pull weeds. What actions should employers consider taking when a bill begins to move? We suggest one or more of these steps:

• Work with local, statewide or regional associations and business groups to advocate your point of view. A succinct comment letter to key legislators signed by many employers can have an impact.
• Collaborate with insurers, vendors, PBMs and benefit consultants, again to advocate the employer position and raise awareness.
• Consider testifying at a public hearing. Lobbyists from all sides tend to dominate the witness list. The employer’s voice can have a telling effect.
• Educate senior management. Many elected officials are small business owners and may cross paths with executives and other employees at your company.

Bottom line: Employers have an opportunity to bring about a harvest that reaps additional benefits instead of one that adds burdens.