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The Massachusetts Paid Family Leave Self-Funded Private Plan Exemption – What We Know Now

Under the new Massachusetts Paid Family Leave Law, M.G.L c. 175M (“MAPFML”), employees and other covered individuals in the Commonwealth will be entitled to a generous set of new paid leave benefits and rights beginning January 1, 2021.  While no benefits are available under the MAPFML until 2021, the first quarterly contributions to the Commonwealth’s MAPFML fund (i.e. to cover the period from October 1 to December 31, 2019) must be remitted by employers with 25 or more covered individuals by January 31, 2020.  The MAPFML and its contribution and other requirements were covered at length in our earlier post

Employers, however, may avoid collecting and remitting contributions by establishing a private plan, so long as the private plan provides benefits and rights meeting or exceeding those available under the MAPFML.  Many employers are exploring and pursuing this option for a variety of reasons including: cost savings; a reluctance to participate in (and direct employees to participate in) a state plan; a hope to maintain some control over (or at least advance warning of) employee leaves of absence; and a desire to preserve existing practices and policies.  Private plans may be either self-funded or fully insured, at the employer’s option.  We discussed the private plan option at length in our earlier post

In order to establish a private plan, an employer must apply annually to the Massachusetts Department of Paid Family and Medical Leave (the “Department”) for an exemption.  An application must be submitted to the Department in advance of the quarter for which the employer is seeking exemption, although for the quarter covering October 1-December 31 2019 only, employers have until December 20, 2019 to apply. 

Self-Funded Private Plan Application Process 

Although somewhat opaque at first, the self-funded private plan application process has solidified over the past weeks and, based on our experience, currently involves the following steps:

  • Bonding.  Self-insured employers must furnish a surety bond running to the Commonwealth.  For exemptions effective October 1, 2019, the bonds are “contributions” bonds, meaning that the bonds will allow the Commonwealth to recover MAPFML contributions should an employer fail to maintain the private plan exemption through January 1, 2021.  It is anticipated that bonds issued to cover periods after 2021 will allow the Commonwealth to recover both contributions and benefit payments, and will be more expensive than the currently required “contributions” bonds.  Surety bond forms with instructions are available here.  We are aware of several companies now issuing these bonds. 

  • Plan document.  When applying, the employer must attach documentation explaining the terms and conditions of the private plan, such as a plan document, summary or policy.  For this step, we have prepared comprehensive private plan documents for our clients that have been submitted with MAPFML applications that received approval from the Department.

  • Application.  The employer must then submit its application through MassTaxConnect.  The employer must answer a series of questions[1], and attach a plan document, summary or policy.  The employer must also attach its bond (although if the employer has not yet obtained a bond, the employer may submit the application with the bond pending).  For ease of the Department’s review, we recommend that employers submit the plan document with the bond (if possible).   

  • Provisional approval.  Shortly after submitting the application, employers who certify compliance in the questionnaire have generally been receiving a “provisional approval” from the Department. 

  • Request to complete application file.  Shortly after receiving provisional approval, many employers have then been receiving a “request to complete application file”, which includes:

    • Bond form and instructions (if the bond has not already been submitted);

    • “Attachment A”, which asks the employer to submit additional information about its PFML contributions, private plan administration, workforce count, and surety bond; and

    • “Attachment B”, which contains a long list of private plan elements and asks the employer to attest that its private plan meets all of these elements.

Around the same time that employers receive the “request to complete application file”, some have also received a courtesy call from the Department updating employers about the application process and alerting them to the “request to complete application file”.  Please note that, in our clients’ experience, the Department has not been providing substantive feedback or answering questions in these conversations.

  • Final approval.  Employers who have completed the “request to complete application file” have just recently begun receiving final approval.  Currently, the final approvals are provided by a phone call from the Department; official written approvals are not expected until 2020.

What If an Application is Denied?

If a request is denied, an applicant may request review by the Department through MassTaxConnect.

What to do Now?

Employers who wish to apply for a self-funded private plan exemption for the quarter beginning October 1, 2019 should immediately begin the process of obtaining a plan document and bond so that the application may be prepared and submitted by December 20, 2019.

[1] To access these questions, go to the Department’s exemptions information page and click on “Review the questions you will be asked during your exemption application.”

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About this Author

Patricia Moran, Employment, Attorney, Mintz Levin, Law firm
Of Counsel

Patricia Moran is an experienced employee benefits attorney who advises clients on a broad variety of employee benefit plan matters, including:

  • Health and welfare matters, including the Affordable Care Act, fringe benefits, cafeteria plans, COBRA, wellness, mental health parity, on-site clinics, health savings accounts, and telemedicine.
  • Retirement plan matters, including nondiscrimination testing, plan document design, service provider contract review and negotiation, and correction of errors.
  • ...
617-348-3085
Natalie Young Labor and Employment Law Attorney Mintz Levin
Associate

Natalie counsels clients and litigates employment disputes on a wide variety of employment and labor matters before state and federal courts and administrative agencies. Her litigation practice includes non-competition and non-solicitation agreements, discrimination, sexual harassment and retaliation claims, and wage and hour compliance. She also counsels clients on various employment and labor issues, including employment and separation agreements, terminations and reductions in force, internal workplace investigations, workplace health and safety, independent contractor and employee classifications, employee handbooks, and company policies, such as sick time and other leaves of absence. 

Prior to joining Mintz as an Associate, Natalie was a Mintz 2014 Summer Associate. She also worked at Mintz as a Project Analyst from 2010-2012, rotating among several practice areas and working with the firm’s Pro Bono program.

Natalie’s additional legal experience includes internships with the United States District Court for the Central District of California, the Massachusetts Supreme Judicial Court, and the Suffolk County District Attorney’s Office in Boston. At Georgetown, Natalie worked as a research assistant for the Center for Research on Adolescents, Women, and the Law in Washington, DC.

At Mintz, Natalie serves as a member of both the Pro Bono Committee and the Firm Associates Committee, and is an Associate Editor of the Employment Matters blog. Outside the firm, Natalie serves as a member of the Associate Leadership Board of the Phoenix Charter Academy Network.

617.348.1768