How to Optimize Paid Family and Medical Leave When Cost Pressure Mounts

With employer medical and pharmacy costs projected to rise as much as 10% in 2026,¹ CFOs and HR leaders are scrutinizing benefit spending for savings wherever they can find them.

In response, several organizations are cutting paid family and medical leave alongside other benefit reductions. Rising healthcare costs make parental leave an especially visible target for cost reduction.

But PFML has become one of the most valued benefits outside of medical coverage — particularly since the COVID-19 pandemic — and remains a driver of employee morale and retention.

Cutting PFML benefits can reduce costs in the short term, but there are smarter options that protect costs while improving recruiting, retention and productivity. There’s a difference between cutting costs and creating savings; PFML cuts often deliver the first, while PFML optimization delivers the second.

The math of cutting PFML

Video communications provider Zoom has reduced parental leave from 22-24 weeks down to 18 weeks for birthing parents, and from 16 weeks to 10 for non-birthing parents.² Accounting and consulting giant Deloitte has halved its paid parental leave for some employees, dropping it from 16 weeks to eight starting in 2027, alongside reductions to PTO, pensions and IVF reimbursement.³

That may be a tempting model, but it’s especially risky for organizations that recently launched a new paid parental or caregiving leave program. Recent implementations have invested in change management; cutting back now signals reveral and undermines the credibility of future benefit decisions. The focus for new programs has often been on getting people out on leave. What gets less attention is what happens after employees return to work — and that’s where the financial case for PFML often lives.

For example, if 92% of leave-takers return and remain a year later, that’s a meaningful win. Each retained employee is a replacement cost avoided — and loaded replacement costs typically run 50% to 200% of annual salary, depending on role complexity.⁴ The math gets attention-grabbing quickly.

Tying paid leave to medical outcomes

For employers with self-funded health plans, reductions in post-partum claims and neonatal intensive care unit (NICU) admissions — often correlated with extended leave — can translate to substantial savings.

To identify these savings, organizations can review maternal claims segmented by leave duration. The next step is looking for differences in claim severity, NICU stays, readmission rates and behavioral health utilization in the 12 months following delivery.

State PFML coordination

Aligning PFML with state requirements matters too. The District of Columbia and 14 states have mandatory paid family leave programs; another nine states offer voluntary programs through insurance. Of these 24 programs, 22 are currently active.⁵ In these states and Washington, D.C., the employer benefit increasingly functions as a “top-up” that supplements state mandates.

Beyond state coordination, modeling the full impact of a PFML cut matters. The actual savings often come in well below initial estimates, while the morale, retention and recruiting costs land harder than expected.

A more nuanced lever is the choice between a state plan and a private plan election, available in some statutory states. Private plans often carry higher administrative costs than state plans — so the calculation comes down to whether the streamlined employer experience and design flexibility are worth the premium.

Connect with HUB International’s experts to optimize your PFML strategy — without cutting the benefit your employees value most.

¹International Foundation of Employee Benefit Plans, “Employers Project 10% Rise in Health Care Costs in 2026,” August 14, 2025.
²Business Insider, “PTO, parental leave, pensions: Even the most prized benefits are on the chopping block,” April 20, 2026.
³Yahoo Finance, “Deloitte just axed $50K IVF funds, halved parental leave and cut PTO — and your employer could be next,” April 19, 2026.
⁴SHRM, “The Myth of Replaceability: Preparing for the Loss of Key Employees,” January 21, 2025.
⁵Bipartisan Policy Center, “State Paid Family Leave Laws Across the U.S.,” April 10, 2026.