Background:
Beginning January 2021, most workers in Massachusetts will be eligible to receive up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave through Massachusetts Paid Family Medical Leave (“MA PFML” or “the Program”). The Program went into effect October 1, 2019 and requires all employers with at least one employee working in Massachusetts to remit contributions for covered individuals. Please see our prior posts, Massachusetts Paid Family and Medical Leave FAQs, and Massachusetts PFML Employer Deadlines Delayed and Final Regulations Released, for information about contributions, deadlines and other requirements of MA PFML.
Alternatively, Employers may apply for an annual exemption to the Program (and may avoid collecting and remitting contributions to the Program) by establishing a compliant private plan that has been approved by the Massachusetts Department of Revenue (DOR). This post takes a dive into what we know about the MA PFML “Private Plan Exemption” and its requirements thus far.
What are the Private Plan Benefit Requirements for a MA PFML Exemption?
First, there are two types of plans that can qualify for an exemption:
- A fully insured PFML Private Plan offered by an insurance carrier licensed by the Massachusetts Division of Insurance (DOI). The Massachusetts Department of Family and Medical Leave (“DFML” or “Department”) and the Department of Insurance (“DOI”) are in the process of creating a standardized declaration of insurance form that carriers may use to demonstrate that their offerings are consistent with the MA PFML requirements. Until that standardized form is released, the Department will continue to consider a carrier-issued declaration of insurance as acceptable proof of compliant MA PFML coverage. The DOI has made available a list of approved insurance carriers that can provide a declaration that complies with the Department’s standards. This list will continue to be updated.
- A self-insured plan funded by an employer which may be administered by a third-party. Employers that are self-insured and have been approved for a Private Plan Exemption must provide the Department with a surety bond running to the Commonwealth of Massachusetts. The Department’s updated bond calculation formula and bond forms are available here.
Second, the approved plan must not cost covered individuals any more than they would be required to contribute to the state plan under MA PFML.
Finally, the benefits offered to covered individuals by the approved plan must be greater than or equal to the benefits provided by the MA PFML by meeting or exceeding the following minimum requirements:
Minimum Family Leave Benefit Requirements:
To qualify for an exemption the private plan must provide the following:
- All covered individuals (full-time, part-time, permanent, or seasonal) are eligible for family leave benefits;
- A weekly paid benefit amount that is greater than or equal to the benefit provided by the PFML program administered by DFML;
- A minimum of 26 weeks of paid leave during the benefit year to provide care to a family member, as defined by PFML, with a serious health condition suffered while on active duty in the armed forces;
- A minimum of 12 weeks of paid leave during the benefit year if their spouse, child, or parent is a current member of the Armed Forces (including the National Guard and reserves) and is on covered active duty or notified of an impending call or order to covered active duty;
- A minimum of 12 weeks of paid leave during the benefit year to provide care to a family member, as defined by PFML, with a serious health condition;
- A minimum of 12 weeks of paid leave during the benefit year to bond with a child during the first 12 months after a child’s birth, or the first 12 months after adoption or foster placement of a child under the age of 18;
- Job protection while the covered individual is on qualified leave;
- Continued employer contributions to employment-related health insurance benefits, if any, at the level and under the same conditions as if the covered individual had continued working for the duration of qualified leave;
- The ability for leave to be taken intermittently or on a reduced leave schedule, with the weekly benefit amount being prorated;
- A specific statement that all presumptions shall be made in favor of the availability of leave and the payment of leave benefits.
Minimum Medical Leave Benefit Requirements:
To qualify for an exemption the private plan must provide the following:
- All covered individuals (full-time, part-time, permanent, or seasonal) are eligible for medical leave benefits;
- A minimum of 20 weeks of paid medical leave in a benefit year if a covered individual is unable to work due to a serious health condition;
- A weekly paid benefit amount that is greater than or equal to the benefit provided by the PFML program administered by DFML;
- Job protection while the covered individual is on qualified leave;
- Continued employer contributions to employment-related health insurance benefits, if any, at the level and under the same conditions as if the covered individual had continued working for the duration of qualified leave;
- Leave may be taken intermittently or on a reduced leave schedule if medically necessary, with the weekly benefit amount being prorated;
- A specific statement that all presumptions shall be made in favor of the availability of leave and the payment of leave benefits.
Important Note: even though an employer receives a Private Plan Exemption, an employee who is denied a leave under an approved private plan still has appeal rights with the DFML and is afforded job protection and protections against retaliation from taking leave.
What Can an Employer Expect from the Private Plan Exemption Application Process?
In order to establish a private plan, an employer must apply annually to the DOR for an exemption. All MA PFML exemption requests will be processed through the DOR’s web-based application via MassTaxConnect. Employers applying for an exemption will receive email notification within 1-2 business days advising that a determination on their plan has been made and can log into MassTaxConnect to review the decision. If the exemption is approved, the employer will receive a letter with instructions listing next steps. If the exemption is denied, an employer may request a follow-up review.
Note that the Department has suggested that an employer notify its employees if it is in the process of applying for a private plan exemption and be sure to distribute details of the private plan once it has been approved.
When Do Employers Need to Apply for a Private Plan Exemption?
The deadline to file for a private plan exemption for the first contribution quarter (October 1, 2019 – December 31, 2019) is December 20, 2019. With the exception of the initial contribution quarter, the Department will accept applications on a rolling basis, but applications must be approved in the quarter prior to the quarter in which the exemption will take effect. If approved, employers may stop making contributions starting on the first day of the quarter following the Department’s approval. The Department has the right to audit any approved private plan to ensure compliance.
Resources:
PFML Exemption Application Process for Employers
Private Plan Benefit Requirements for PFML Exemptions
Bond Requirements for Approved Self-Insured Plans
Employer’s Guide to Paid Family and Medical Leave
PFML Mandatory Workplace Poster
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.
