10 Common Parental Leave Confusions Explained
After talking to many expecting and new parents about their parental leave, I certainly noticed many common confusions.
This post explains confusions and unpleasant surprises new parents faced before, during, and after their parental leave. Hope this can help expecting parents avoid common pitfalls, be efficient with their research, and know what to expect about their parental leave!
1. Maternity leave are often covered by “short-term disability” insurance.
Wage replacement during pre-partum or post-partum medical leave is often covered by “short-term disability” insurance from CA state or your employer’s insurance plan. The word “disability” certainly confused a lot of people.
2. Job protection and wage replacement are two different things.
Acronyms are thrown around a lot – PDL, CFRA, NPLA, FMLA, SDI, PFL, VDI, VP. You may wonder which benefits are you entitled to, and what’s the point of having so many different benefits.
They all boil-down to two main themes: job protection that are unpaid (PDL, CFRA, NPLA, FMLA, ), and paid benefits for income replacement ( SDI, PFL, VDI, VP). After knowing which are job protection and which are wage replacement benefits, things are less muddy. This post explains each benefit in more detail.
3. Knowing which party has the answers to your question will save you lots of time.
Before someone sends you on a wild-goose chase, knowing who is the right person to ask the question will save you from lots of back-and-forth, waiting time, and frustration.
Claims administrator/insurance company - if your question has to do with the short-term disability or bonding claim.
HR – if it has to do with job protection benefits, or company policy for using paid time off.
CA EDD – if it has to do with California State Disability Insurance and Paid Family Leave.
4. Taking a medically necessary pre-partum leave does not mean you will get a shorter post-partum leave.
For healthy pregnancies, and assuming you can get medical certification from your doctor, it is common to expect 4 weeks of medical leave before your due date, and 6 weeks after delivery date (8 weeks for caesarean section). The 6/8 weeks do not get affected by whether or not you took pre-partum leave.
5. There’s a designated period of time to submit your claims, not too early, not too late.
CA SDI: Submit your claim no earlier than nine days after the first day your disability begins, but no later than 49 days after your disability begins, or you may lose benefits.
CA PFL: Submit your claim no earlier than the first day your family leave begins, but no later than 41 days after your family leave begins, or you may lose benefits.
If you have an employer plan in lieu of CA SDI, check for the claims submission date as they usually differ from the CA SDI. If your employer uses an insurance company to administer claims, they may call you near your due date to find out the actual delivery date for claims purposes.
6. Disability and Bonding are two separate claims.
Disability claims cover the pre-partum and post-partum medically necessary leave, bonding claims usually happen during a specified period of time after the baby is born (For example, within 1 year of childbirth).
Don’t assume your disability benefits will simply continue into bonding time, even if you are taking bonding leave immediately following the disability claim. There’s usually some continuation of benefits or new claims paperwork when you transition from a disability claim to a bonding claim. This is true for CA state benefits as well as employer sponsored plans.
7. There is usually a waiting period before disability benefits start.
Many people get surprised by the low benefit amount on their first paycheck from disability insurance (whether it is from the state or from the employer sponsored insurance plan).
This is because during the “waiting period”, which can be a specified number of calendar days at the beginning of your disability claim, insurance does not pay any benefits.
To get paid during this waiting period, you may choose to use paid-time-off. In some instances, your employer may require you to use your paid time off during this time, or may impose limits on the type of paid-time-off to be used. Asking your HR about this paid-time-off policy will help avoid surprises.
8. Insurance payments don’t always replace 100% of your earnings.
You can sometimes supplement insurance payments using PTO or by working part-time. Employers sometimes offer supplemental benefits to top-up insurance payments to 100% of your regular earnings. However, it is important to note that each employer have specific rules on whether paid time off may or may not be used to supplement insurance payment. Thoroughly understanding these options will help you optimize your parental leave to best fit your financial and baby care needs.
9. Payments come from different sources and can be hard to keep track of.
Payments could come from CA EDD (for state disability insurance), your employer (for paid time off), or third party insurance administrator (for employer voluntary plans or other supplements). Keeping track of these benefits and verifying you are getting paid correctly by each party can be a daunting task when you are sleep deprived with the baby. Understanding what to expect in advance is a good idea.
10. Different scenarios for payment of health insurance premiums
Before you go on leave, often the employee’s portion of health insurance premiums are automatically deducted from paychecks. If you are on paid leave with a portion of income from your employer, you may be still eligible for continued paycheck deductions and you should confirm that. If you are on job-protected unpaid leave, the automatically paycheck deductions couldn’t happen anymore, and you may have to follow payment instructions from your HR for health insurance premiums. If you go on personal leave beyond job-protected bonding leave, you may be liable to pay the full cost of health insurance, not just the employee portion.
Bottom line – the devil is in the details. There's a lot of nuances, research in advance so you are not surprised and frustrated while on parental leave, you have many more important things to deal with later (like taking care of yourself and the baby)!
Penguin Benefits can help you thoroughly research and optimize your parental leave. Get started here.