Contacts
On April 10, 2019 we held a very infomrative 90 minute webinar on this topic. We have provided you with the presentation slides and webinar recording to view at your own convenience.
Massachusetts Paid Family and Medical Leave Contribution Date (July 1, 2019) Approaches: What Massachusetts Employers Need to Review and Recommended Actions
1. Background
In June 2018 the Massachusetts legislature passed the Massachusetts Paid Family Medical Leave law (the law). The law grants significant new employee rights and paid leave to Massachusetts employees generally. Claims for paid leave will not be eligible or processed or paid until January 1, 2021. Paid leave will then be available to employees for their own serious health condition (up to 20 weeks); the serious health condition of a family member or time for birth and bonding (up to 12 weeks) or to care for a family member injured during military service (up to 26 weeks). In order to be eligible, an employee must have approximately 15 weeks or more of earnings and have earned at least $4,700 in the 12-month period before they apply for leave.
2. Issuance of Regulations and State Guidance
Although the law was passed in June 2018, the state did not release regulations and guidance until January 23, 2019. The regulations are subject to a public comment period which will conclude in late March and then they will be subject to a public hearing within 60 days afterwards. The state has created a Paid Medical and Family Leave website and is currently conducting public hearings on the regulations across Massachusetts. Here is the bottom line: as of today, the regulations are not final and some of them could be modified.
Under the law, the paid leave program consists of (1.) medical leave and (2.) family leave. Funding of either the medical or family leave components is derived from employee and employer contributions. Employers with fewer than 25 employees, however, are excused from the employer contribution requirement. The law imposes on employers additional new compliance obligations (ex. employee notice, employee sign off, continued employer health insurance premium contribution during leave) as well.
3. FMLA PLUS, PLUS, PLUS!
Although there are many similarities with FMLA, there are some significant new employee rights and protections for Massachusetts employees under the law that exceeds FMLA requirements. Additionally, Massachusetts employers that are small enough to currently escape compliance with FMLA will essentially now have to comply with the substance, and a lot more, of FMLA under the new state law. Fortunately, employers still have ample time to become familiar with new employee protections and rights and which will take effect on January 1, 2021. For now, the most immediate concern employers should focus on is what type of paid leave program do they wish to offer and how are they going to fund the program?
4. Recommended Actions
A. Sign Up for Guidance and Alerts from the Massachusetts Department of Paid Family and Medical Leave.
The state, through the Department of Family and Medical Leave, hopes to release an employer tool kit in April along with applications for employer exemption from the state funded program option. The tool kit will have, among other things, required employee notices. An employer can sign up for alerts about those releases by going to MassPFML@Mass.gov. You can also submit questions through the website as well.
B. Determine Whether You Are A Small or Large Employer.
Your Massachusetts employee headcount will determine whether you have to make a required employer medical leave contribution. Employers with fewer than 25 Massachusetts employees can require their employees to make 100% of the required contributions for the medical leave component and 100% of the family leave component. Employers with 25 or more Massachusetts employees are required to remit an employer contribution for medical leave but are not required to make an employer contribution for family leave.
Here is how you determine your employer size under the law. Your Massachusetts workforce employee head count is determined by the previous calendar year (2018). You must count all Massachusetts employees (FT, PT, seasonal, temporary, etc.) on the payroll during each pay period. An employer must also count individuals to whom it paid during a pay period and reported the payment on IRS Form 1099-MISC. You then divide that aggregate number by the number of pay periods to determine whether you are at the 25 Massachusetts employee threshold.
Finally, Massachusetts municipalities are excused from the law but can opt in. The state anticipates having an opt in application available sometime in April.
C. Determine, Before July 1, 2019, What Type of Program Funding Option You Will Follow.
An employer has three program funding choices under the law:
- State program
- Self-funded private program
- Fully insured private program
Section 11 of the law, requires an employer to apply for an exemption from the state program contributions with the Department of Family and Medical Leave if the employer wishes to pursue a self-funded or a fully insured option. An employer with a very generous corporate leave policy that exceeds the financial requirements ($850 maximum weekly benefit) of the state program may want to consider opting to self-fund. Self-funding would also require the purchase of a bond that runs to the state of Massachusetts. Unfortunately no insurance carrier has yet to offer a fully insured program solution at this time since the regulations are not final. Many employers are considering participating in the state funded program option for 2019 and then switching to a fully insured option when they become available in the marketplace. The state recently communicated that it expects to release an exemption application in April if an employer wishes to purse either a self-funded option or a fully insured option.
D. If You Elect the State Program Funding Option Or You Are Going To Self-Fund and Require Employee Contributions… Start To Work On An Expected Budget.
Here are the current parameters for employee/employer contributions:
- Contributions cannot be required beyond the base income limit for taxation set by the Social Security Administration each year. For 2019, the figure is $132,900.
- Employers with 25 or more employees will be required to remit a total contribution of 0.63% of eligible payroll (capped at the base income limit for social security set by the Social Security Administration). That 0.63% total contribution is broken down as follows:
- 0.52% (or 82.5% of the 0.63) is for medical leave contribution of which the employee’s share is 40% and the employer’s share is 60%
- 0.11% (or 17.5% of the 0.63) is the family leave contribution of which the employee can be required to contribute 100%
- For employers with fewer than 25 employees, the entire (100%) medical leave contribution and family leave contribution will come from the employee. The small employer must direct the employee contributions to the sate if it participates in the state program option.
- In regards to employee contributions, the state currently advises that the employee contribution must be on a post-tax basis. The state reports that it is discussing with the IRS the issue of making the employee contribution pretax.
- Depending upon an employer’s benefit culture, an employer does have the ability to pay the employee contribution as well and designing a paid leave program, with identical employee rights, that is at least as generous, or even more generous, as the state funded program option.
E. If You Are Going to Participate in The State Program Option, Make Sure You Are Registered on DOR Tax Connect.
If you are a Massachusetts employer, it is assumed that you have an account with the Massachusetts Dept. of Revenue (DOR) Tax Connect System. If not, you must register with the DOR and create an account. At the end of each calendar quarter, the employer must file an earnings report through the DOR tax connect system. The earnings report will include, among other things, wages paid data for identified employees. The DOR will determine the contributions for each employer, based on the earnings report, and will advise the employer of the required contribution payment. The employer will have 30 days from the end of the quarter to remit payment.
There are no employer aggregation or control group rules. Each company with its own EIN has its own responsibility.
At the moment, the state advises that employer contributions for the state program are not tax deductible business expenses. The state is discussing the issue with the IRS.
F. Between Now and 2021, Spend Time To Learn The New Employee Protections, Employer Obligations and Leave Benefit Coordination
As stated earlier, the paid benefit component of the law is just one aspect of the law. The law also creates significant new employee rights and protections and employers obligations. If you are going to self-fund or later pursue a fully insured program option, you may want to consult with an employment law attorney to make sure your program honors all of the new employee rights. Finally, the new law has a number of benefit offset provisions and guidance on how it would coordinate with an employee on, for example, FMLA, Short Term Disability or Massachusetts Maternity Leave. You have time to learn these new requirements.
G. Sign Up For the Upcoming Marsh McLennan Agency Webinar On This Topic.
Join us April 10 from 11 - 12:30 PM EST on a webiner featuring George Thompson, our Vice President of EH&B Compliance, and Corey Higgins, an Employment law partner with the firm of Mirick O’Connell. The webinar will discuss the program funding options as well as an employer’s new compliance obligations and the new protections that employees will have under the law. REGISTER TODAY
Additional Resource Links Below:
- Paid Family Medical Leave for employers FAQ | Mass.gov
- https://www.mass.gov/info-details/paid-family-medical-leave-for-employers-faq
- Paid Family Medical Leave for employees FAQ | Mass.gov
- https://www.mass.gov/info-details/paid-family-medical-leave-for-employees-faq
- Department of Family and Medical Leave | Mass.gov
- https://www.mass.gov/orgs/department-of-family-and-medical-leave
- The Law: MGL c.175M as added by St. 2018, c.121
You May Also Be Interested In
- Event
01.27.2021
Webinar | The New Norm: Maintaining Productivity While Working From Home
- Event
02.04.2021
Webcast | Continued Road to the Vaccine: Clinical and Compliance Considerations for Employers
- Event
02.18.2021
Webcast | HIPAA Privacy and Security Training
- Event
03.16.2021
Webinar | Pay Equity Disputes and Risks
- Event
03.18.2021
Webcast | How to Survive a U.S. Department of Labor Audit
- Event
04.15.2021
Webcast | Qualifying Life Events and Permitted Election Changes
- Event
05.20.2021
Webcast | Wellness Programs
- Event
06.17.2021
Webcast | Mid-Year Compliance Review
- Event
07.15.2021
Webcast | FMLA and Employee Benefits
- Event
08.19.2021
Webcast | Medical Expense Spending Accounts (Health FSA, HRA, HSA)
- Event
09.16.2021
Webcast | COBRA
- Event
10.21.2021
Webcast | Domestic Partner and Non-Tax Dependent Coverage
- Event
11.18.2021
Webcast | ACA Reporting Requirements
- Event
12.16.2021
Webcast | Year-End Compliance Review and Forecast
- Blog
01.25.2021
Summary of Benefits Provisions in the 2021 Consolidated Appropriations Act – Part 2
- Blog
01.22.2021
Annual CMS Medicare Part D Disclosure Due for Calendar-Year Plans
- Event
01.21.2021
Webcast | State Individual Mandate Reporting Requirements
- Blog
01.21.2021
A Bitter Pill to Swallow
- Event
01.20.2021
Webinar | New Developments in the Classification of Workers
- Event
01.13.2021
Webinar | Leave of Absence and Return to Work Issues in the Era of COVID-19
- Blog
12.29.2020
A Coronavirus Update for Employers
- Blog
12.29.2020
A Summary of Benefits Provisions in the 2021 Consolidated Appropriations Act
- Event
12.17.2020
Webinar | Year End Checklist 2020 and Future Forecast 2021
- Blog
12.04.2020
Additional Health Reimbursement Arrangements Allowed Under Final Rules
- Blog
11.20.2020
Federal Agencies Issue Final Rules Addressing Transparency in Coverage
- Event
11.19.2020
Webinar | ACA Reporting Requirements 2020
- Event
11.12.2020
Webcast | 2020 Election Results: The Impact to Benefit Plans
- Blog
10.30.2020
A Summary of 2021 Health and Welfare Plan Limits and Other Annual Adjustments
- Blog
10.22.2020
Final 2020 IRS Forms 1094/1095 Published
- Event
10.15.2020
Webinar | Health Savings Accounts 2020
- Blog
10.14.2020
INSIGHTS Newsletter
- Blog
10.09.2020
Affordable Care Act Reporting Relief Extended for 2020
- Blog
10.09.2020
Michigan Revises No-Fault Auto Insurance
- Event
10.08.2020
Webcast | A Tale of Two Breaches
- Blog
09.24.2020
DOL Issues New FFCRA Leave Guidance
- Event
09.17.2020
Webinar | FMLA and Employee Benefits 2020
- Blog
09.14.2020
Transportation Fringe Benefits Update
- Blog
08.31.2020
Massachusetts Family Medical Leave Update: Renewal of Fully Insured and Self-Funded Private Plan Exemptions, Upcoming Dates, Plan Options and Benefit Coordination
- Blog
08.26.2020
The Empire State Strikes Back
- Event
08.20.2020
Webinar | Compliance Considerations When Self-Insuring 2020
- Blog
07.29.2020
2021 Employer Affordability Safe Harbor
- Event
07.22.2020
WEBINAR | Next Chapter: Massachusetts Family Leave Act 2021
- Blog
07.22.2020
Massachusetts Paid Family Medical Leave Update (July 2020)
- Blog
07.22.2020
Massachusetts Creditable Coverage – Employer Update (2020)
- Blog
07.22.2020
The Rise of State Individual Mandates - July 2020
- Event
07.16.2020
Webinar | Annual Required Notices 2020
- Blog
07.01.2020
IRS Addresses Direct Primary Care and Health Care Sharing Ministries
- Blog
06.30.2020
Proposed ESG Regulation
- Event
06.18.2020
Webinar | Mid-Year Compliance Review 2020
- Blog
06.16.2020
COVID-19 Plan Administration Relief: The Good, the Bad, and the Ugly
- Blog
06.16.2020
What’s Old is New Again – Annual PCORI Fee is Due July 31st
- Event
05.28.2020
Webcast | COVID-19 Update: Navigating the Coronavirus, Vaccines, Testing and Wellbeing
- Blog
05.28.2020
DOL Finalizes Rule Expanding Use of Electronic Delivery for Plan Documents
- Blog
05.27.2020
2021 Plan Limits and Final Coupon Guidance Released
- Blog
05.27.2020
A Tale of Two IRS Notices
- Event
05.21.2020
Webinar | COBRA 2020
- Event
05.19.2020
Webinar | Legal and Compliance Return to the Workplace: Considerations for Employers
- Blog
05.11.2020
IRS and DOL Extend Filing Deadlines Due to COVID-19
- Blog
04.20.2020
IRS Extends Deadlines Due to COVID-19
- Event
04.16.2020
Webcast | COVID-19: Managing the Impact- Weekly Update 4.16.20
- Event
04.16.2020
Webinar | ERISA Basics 2020
- Blog
04.10.2020
CARES Act Signed Into Law
- Event
04.09.2020
Webcast | COVID-19: Managing the Impact- Weekly Update 4.9.20
- Event
04.02.2020
Webcast | Update on COVID-19: Navigating the Coronavirus and Managing the Impact
- Blog
03.30.2020
CARES Act Provisions Expand Retirement Plan Access for Individuals Impacted by COVID-19
- Blog
03.27.2020
FFCRA Employee Rights Poster Notification Poster Available
- Blog
03.26.2020
DOL Issues New Guidance on FFCRA and Required FFCRA Posters
- Event
03.24.2020
Webinar | Navigating the Coronavirus and Managing the Impact
- Blog
03.23.2020
The Rise of State Individual Mandates - March 2020
- Event
03.19.2020
Webinar | HIPAA Privacy and Security Training 2020
- Blog
03.10.2020
Federal Agencies Issue Proposed Rules Addressing Transparency in Coverage
- Event
02.20.2020
Webinar | Qualifying Life Events & Permitted Election Changes 2020
- Blog
02.13.2020
The Rise of State Individual Mandates
- Blog
02.10.2020
Annual CMS Medicare Part D Disclosure Due for Calendar-Year Plans
- Event
01.23.2020
Seminar | Employment Law Landscape 2020
- Blog
01.22.2020
The Affordable Care Act’s Employer Mandate: Part 4
- Event
01.16.2020
Webinar | Wellness Programs 2020
- Blog
12.26.2019
Repeal, Repeat, Remand – Ho Ho Hum?
- Event
12.19.2019
Webinar | Year End Checklist and Future Forecast
- Blog
12.09.2019
Employer HIRD Form Due on December 15, 2019
- Blog
12.04.2019
Affordable Care Act Reporting Relief Extended for 2019
- Event
11.21.2019
Webinar | ACA Reporting Requirements
- Blog
11.20.2019
IRS Releases Draft 2019 Instructions for Forms 1094/1095
- Blog
11.08.2019
IRS Releases 2020 Limits for FSAs and Other Benefits
- Blog
10.28.2019
California Mandates a Notice Requirement for Flexible Spending Accounts
- Blog
10.28.2019
All That Glitters is not Gold
- Blog
10.28.2019
Medical Loss Ratio Rebates
- Blog
10.28.2019
The Affordable Care Act’s Employer Mandate: Part 3
- Event
10.17.2019
Webinar | Health Savings Accounts
- Blog
10.09.2019
2019 Massachusetts HIRD Form Filing Deadline Approaches
- Blog
10.04.2019
Insurance Carriers Approved for Mass Paid Family Medical Leave Act
- Blog
09.30.2019
New Health Reimbursement Arrangements Allowed Under Final Rules
- Event
09.19.2019
Webinar | New HRA Options
- Blog
09.19.2019
2020 Employer Affordability Safe Harbor
- Blog
09.18.2019
The Affordable Care Act’s Employer Mandate: Part 2
- Blog
09.17.2019
Medicare Part D Notice Reminder
- Event
08.15.2019
Webinar | Association Health Plans
- Blog
08.12.2019
And in this Corner…the Fight to Expand Association Health Plans Continues
- Blog
07.31.2019
New Guidance on Mass FMLA Payroll Contributions and Wage Withholdings
- Blog
07.22.2019
IRS Expands Definition of Preventive Care for Qualified High Deductible Health Plans
- Event
07.18.2019
Webinar | Annual Required Notices 2019
- Blog
07.10.2019
Tax Consequences of Gym Membership Reimbursement
- Blog
07.09.2019
Agencies Release 2020 Adjusted Limits
- Blog
07.08.2019
The Affordable Care Act’s Employer Mandate: Part 1
- Blog
07.01.2019
President Signs Executive Order to Improve Healthcare Price and Quality Transparency
- Event
06.20.2019
Webinar | Mid-Year Compliance Review
- Blog
06.18.2019
Mass Paid Family Medical Leave Update
- Blog
05.28.2019
Potential FMLA Violations
- Blog
05.24.2019
Annual PCORI Fee is due
- Blog
05.23.2019
The Status of Qualified Transportation Fringe Benefits
- Event
05.16.2019
Webinar | Wellness Programs
- Blog
05.03.2019
Massachusetts Online Exemption Application Now Available for Employers Seeking a Private Plan Option to State Paid Family Medical Leave Program.
- Blog
04.30.2019
Massachusetts Employer Alert
- Blog
04.26.2019
Massachusetts Releases New Guidance and Employee Notice Template For Massachusetts Paid Family and Medical Leave (PFML)
- Event
04.18.2019
Webinar | HIPAA Privacy & Security Training
- Blog
04.11.2019
Leave Laws Continue to Multiply
- Blog
04.10.2019
Massachusetts Creditable Coverage
- Blog
04.02.2019
Association Health Plans (AHPs) – Update
- Blog
03.25.2019
U.S. Department of Labor Releases Proposed Overtime Rule
- Event
03.21.2019
Webinar | Federal Continuation Coverage
- Blog
03.06.2019
Reminder: Annual CMS Medicare Part D Disclosure
- Blog
03.05.2019
Mistaken HSA Contributions
- Blog
03.04.2019
Frequently Misunderstood Health Savings Account Issues
- Event
02.21.2019
Webinar | FMLA & Employee Benefits
- Event
02.13.2019
Seminar | How to Survive a DOL Audit
- Blog
02.05.2019
Government Considering Modifications to HIPAA Privacy and Security Rules
- Blog
02.04.2019
Automatic Enrollment Given a Boost
- Event
01.29.2019
Employment Law Landscape 2019
- Event
01.17.2019
Webinar: ACA Reporting Requirements
- Blog
12.31.2018
Slowly Filling in the Blanks
- Blog
12.27.2018
Women’s Contraceptive Coverage under the Affordable Care Act (ACA) – Update
- Blog
12.20.2018
Making a List and Checking It Twice
- Blog
12.18.2018
Texas Federal Court Rules ACA Unconstitutional
- Event
12.14.2018
Webinar | Q4 2018 Health Care Reform Update
- Blog
12.03.2018
An End to Pharmacy Gag Clauses
- Blog
12.03.2018
Employment Law Update: Minimum Wage Keeps Climbing
- Blog
11.29.2018
2018 Form 1094/1095 Reporting
- Blog
11.21.2018
Do the HIPAA Privacy and Security Rules Apply to My Organization? Part Two
- Event
11.20.2018
Webinar | Back to Basics: Consumer-Based Plans 101
- Blog
11.16.2018
Better Late Than Never
- Blog
11.02.2018
Compliance Update: HRAs Poised For a Facelift
- Blog
10.22.2018
FMLA Update - Organ Donation
- Blog
10.18.2018
Do the HIPAA Privacy and Security Rules Apply to My Organization?
- Blog
09.14.2018
Navigating the Wellness Program Rules for 2019
- Event
01.23.2018
Employment Law Landscape 2018
- Blog
10.06.2017
Interim Rules on Contraceptive Exemptions