Should my company top up state-paid family leave and short-term disability benefits during parental leave?

Claire Baker
Jan 10
4 min read

Two things people hate: insurance and government bureaucracy.

Why would you invite that nonsense into your business when you don’t have to?

Topping up state and private disability insurance payments to supplement the cost of parental leave seems like suuuuuuuuuch a good idea.

Until you actually try it.

If you think topping up will save money, let’s talk through what actually happens in a top-up policy:

🫠 STATE-PAID PARENTAL LEAVE

State-paid parental leave ~ IF you have it ~ only covers up to a certain percent of the average weekly wage in that state. That's not much. Not much for the employee to live off of, and not much savings for the company.

If you make an above-average income in that state (which most professionals do), your payments will be capped at less than the actual percentage you’re expecting.

And the state will take its sweet time. I worked with one father in Oregon whose claim wasn’t approved until his kid was 4 months old.

Result: You’ll have to either wait around for the state to confirm the payment amounts or guess.

⏯️ DELAYS

And the state will take its sweet time.

Result: You’ll have to either wait around for the state to confirm the payment amounts or guess.

🫨 SHORT-TERM DISABILITY INSURANCE

Short-term disability insurance (STD) offers a higher maximum benefit than state programs, but many policies require filing for state benefits first and only pay the difference. Result: You’ll be waiting on first the state, then the insurance company’s timeline.

Short-term disability insurance (STD) offers a higher maximum benefit than state programs, but many policies require filing for state benefits first and only pay the difference. In some states, there are even laws about how much STD can stack on top of state and company benefits.

Because god forbid somebody get a “windfall” for not working during one of the most chaotic periods of their lives.

And STD is only available to birth parents. Meaning that less than 50% of new parents are eligible.

Result: You’ll be waiting on first the state, then the insurance company’s timeline for confirmation that it works the way you think.

And the approval notices from the insurance company are so confusing, that it’s hard to know for sure how much they’ll pay until the checks come in.

Through the mail. 🐌✉️

☝️ TERMS & RESTRICTIONS

And STD is only available to birth parents. Meaning that less than 50% of new parents are eligible.

⌛️ LENGTH OF BENEFITS

The length of time that the state or insurance will pay almost certainly won’t match the length of your company’s leave, meaning you’ll have to recalculate every time a benefit runs out. Result: You’re trying to follow the logic of a state that may recalibrate benefits several times in the course of the leave.

The length of time that the state or insurance will pay almost certainly won’t match the length of your company’s leave, meaning you’ll have to recalculate every time a benefit runs out.

Most insurance only pays for 6-8 weeks. To extend, the employee may have to file a follow-on claim.

And the states are even less predictable. Many offer different structures for birth and non-birth parents. And if state disability income (SDI) is a different program, the payments and rules may be completely separate for the disability and bonding portions of leave.

The length of required job protections almost never lines up with the length of state benefit payments, either.

Result: You’re trying to follow the logic of a state that may recalibrate benefits several times in the course of the leave.

⏲️ INCREMENTS OF TIME

Both insurance and state benefits usually pay out weekly. But what if you pay semimonthly? It’s up to you to do the math. Good luck!

Both insurance and state benefits usually pay out weekly. But what if you pay semimonthly?

And you have to deduct their portion of benefits, which are usually invoiced monthly.

If the employee’s payment amounts change from week to week because of waiting periods, partial weeks, processing delays, or changes in any of the factors above, so will the top-ups.

It’s up to you to do the math. Good luck!

🙈 EFFING HIPAA

Both state and insurance claims require that the employee share health information as part of their claim. Which means that the status and amounts of their claims are legally none of your beeswax. Result: You’re relying on the employee to navigate all of these claims themselves and report the results back to you.

Both state and insurance claims require that the employee share health information as part of their claim. Which means that the status and amounts of their claims are legally none of your beeswax.

Result: You’re relying on the employee to navigate all of these claims themselves and report the results back to you.

THEY have to check their snail mailbox.

THEY have to call the insurance company or state.

THEY have to wait on hold and make sense of what insurance or the state tells them.

Then THEY have to report it accurately back to you.

And, in case it isn’t obvious already, THEY are already rather busy and sleep deprived.

😫 AND YOU’RE THE ONE WHO HAS TO FIGURE IT ALL OUT

Managing all of this takes time and brain power. You’re contacting the employee, looking up policy details, doing unconfident math, and trying to figure out payroll work-arounds. The lost productivity cancels out the amount you’re saving by relying on these outside subsidies. Meanwhile, the new parent thinks it’s all your fault and blames you for the terrible experience you’re putting them through.

Want to create a parental leave policy that doesn't drive you and your team crazy? We can help you build a bespoke parental leave policy quickly, no matter where your employees live and work.

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