Equivalent plan applications for employers to opt out of Paid Leave Oregon (PLO) are now available. As we discussed in our PLO Alert from July 25th, employers can opt out of the state program. The opt out plan must provide paid leave benefits that are equal to or greater than those provided by PLO. Employers with approved opt out plans and employees working for an employer offering an opt out plan, are not required to pay contributions to Paid Leave Oregon.
There are two types of opt out plans designs. Each type has specific requirements.
- Fully-Insured Opt Out
- The employer purchases an insurance policy from an insurance company, and the benefits related to the plan are administered through the insurance policy.
- The insurer provides an insurance policy and description of the benefits.
- These plans are filed and approved by the Oregon Division of Financial Regulation and the insurance company assumes the financial risk.
- Self-Administered Opt Out
- The employer assumes all financial risk associated with the benefits and administration of the opt out plan, whether the plan is administered by the employer or a third-party administrator.
- Self-administered plans are required to provide proof of solvency. The documentation must show the employer has enough funds or resources to cover the PLO total contribution rate (for both the employer and employee) for the upcoming three calendar quarters, regardless of employer size. The PLO Solvency Guide includes more details.
- The employer provides the plan document that explains how the benefits work and includes disclosures about employee rights under the plan.
Review Paid Leave Oregon’s Equivalent Plan Guidebook for additional details on opt out plan requirements
Both types of plans must be filed and approved by Paid Leave Oregon. Employers can now apply for approval of an opt out plan through Frances Online. Frances Online is the new portal Oregon employers can use for filing combined payroll reporting for both unemployment insurance and PLO contributions and for submitting applications for equivalent plans. Filing must be done on-line but the opt out plan application can be viewed here. The application fee is $250. A separate application is required for each Business Identification Number (BIN). Opt out plans must be submitted by November 30th to avoid paying contributions beginning January 1, 2023.
As of this writing, the Oregon Division of Financial Regulation is in the process of reviewing the fully-insured insurance policies. None of these polices are approved yet. Paid Leave Oregon cannot approve fully-insured opt out plans until they have been approved by the Division of Financial Regulation. Employers who intend to opt out to a fully-insured plan can file a Declaration of Intent. This exempts the employer from paying PLO contributions beginning January 1, 2023 if the opt out plan is not approved by then. It extends the opt out approval date to May 31, 2023. If the opt out plan is not approved by May 31st the employer will be required to pay contributions back to January 1, 2023.
Contact your IMA employee benefits team if you would like assistance exploring the opt out options for PLO. Additional details about opting out of PLO can be found on the department’s Equivalent Plan webpages.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.