Insurance could be the solution for paid parental leave

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This summer, the Society for Human Resource Management (SHRM) released an annual survey of employers showing that fewer companies are offering paid parental leave, dropping from 44% in 2020 to 27% in 2022.

He also said that only 35% of employers now offer paid maternity leave beyond what is required by law, compared to 53% in 2020. In a similar vein, last week some employers have said they have reduced the number of weeks of paid maternity and paternity leave they will offer (streaming service Hulu has reduced its fully paid parental leave from 20 weeks to eight weeks).

Paid parental leave is unaffordable for most American companies, which partly contributes to its absence. Small businesses (those with less than 100 employees) make up a large percentage of U.S. employers and are unlikely to offer paid maternity or paternity leave. Some states like California have provided assistance, but their policies typically only pay 50-60% of salary up to a weekly cap for 8-12 weeks.

Dirk Doebler is the CEO and founder of Parento, an insurance-based parental leave offer for businesses. According to Deobler, Parento is the first paid parental leave insurance that addresses the lack of paid parental leave in the United States and makes it more affordable for companies to invest in gender-neutral paid parental leave.

“We talk daily with companies and their benefits brokers about parental leave. Paid parental leave is one of the hottest topics of conversation with HR and total compensation managers, and it’s no longer limited to technicians or well-paid office workers. Choose an industry and a company from that industry contacted us,” he added.

Most Americans are covered by their employer’s group insurance. For example, paid parental leave can be insured, just as an employee’s health, dental, vision, short and long term disability and life insurance policies are insured.

For example, when health insurance is provided to employees by their employer, that employer contracts with one or more health insurance companies, and employees can choose between these plans. Contracting with a health insurance company allows an employer to join an insurance risk pool and helps them avoid the high cost of employee self-funding policies.

Interestingly, according to internal Parento research, it typically costs employers 20-30% less to contract and also insure an employee’s paid parental leave than to self-fund it. “It makes sense for companies to want paid parental leave insurance, which can be higher risk and cost more than dental or vision insurance for some companies,” adds Doebler.

Extending (or even just offering) paid parental leave has been associated with reduced maternal depression and anxiety, parental mortality, and increased marital satisfaction and fertility. . It also reduces employer attrition, with women who take paid leave being much more likely to re-enter the workforce and work longer, on average, one to three years later.

Now, with the option of providing paid parental leave on the table, employers have no reason to ignore this essential benefit.

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