Termination of Private Plans

Terminations

Voluntary

All private plans are approved for a 3-year period.

To renew the private plan, a new application must be submitted, which means the employer must educate the employees about the plan and hold a vote on the proposed plan before submitting the application.
To terminate the private plan at the end of the 3-year period, the employer must provide the Authority at least 90 days' notice.
- This notice is necessary in order for the Authority to adequately prepare to intake requests for paid leave from the employee population.

Failure to provide adequate notice of the intent to terminate the private plan or failure to retain private plan coverage for the full 3-year period may result in penalties. Penalties are in addition to contributions owed for coverage under the public plan. Employers cannot take deductions from employees to pay penalties.

Involuntary

The CT Paid Leave Authority may deny or withdraw approval for a private plan if it determines that the employer has:

Threatened or coerced employees in connection with the private plan vote
Failed to pay benefits
Failed to pay benefits timely and in a manner consistent with the public plan
Failed to maintain an adequate surety bond as required by the CT Insurance Department (CID)
Misused private plan funds
Failed to submit reports as required
Provided materially false information to the CT Paid Leave Authority or the CT Insurance Department (CID) or failed to comply with sections 31-49e to 31-49t, inclusive of the Connecticut General Statutes
Has directed or permitted its insurer or Third-Party Administrator to engage in such actions

If the Authority terminates the private plan for any reason, it will indicate the date that such termination will occur. Coverage under the public plan will begin on the first day following the last day that coverage was in force under the private plan.

Penalties

Upon termination of the private plan, the employer must remit to the Authority all contributions still in its possession that were collected from employees related to the private plan coverage. Contributions that are still owed to an insurance carrier or third-party administrator providing private plan coverage should be remitted to the carrier or TPA.

Voluntary Terminations

Failure to provide at least 90 days’ notice of intent to terminate may result in a penalty of up to 100% of the contributions owed for the first calendar quarter that coverage is in force under the public program.
Failure to maintain private plan coverage during the entire 3-year period may result in a penalty of up to 300% of the contributions owed for the first calendar quarter that coverage is in force under the public program.
- If the Authority finds that reasonable efforts were made to maintain private plan coverage but such efforts were unsuccessful, it may reduce the penalty by one third.
- For example, if private plan coverage was sought under a different insurance carrier, but the employees voted against the new plan, that may qualify as a reasonable effort.

Involuntary Terminations

If the Authority requires a private plan to terminate, it may assess a penalty of up to 400% of the contributions owed for the first calendar quarter that coverage is in force under the public program.