Our First PFML Insured Quote and Other Updates

As mentioned in previous posts, there are a couple of insurance companies who are able to provide quotes for insured Massachusetts Paid Family and Medical Leave (PFML) private plans.  These plans would presumably allow an employer to apply for, and receive, an exemption from participation in the state plan.  One key advantage of this is ability to postpone contributions to the state plan that begin on October 1.

Private Plan Quote

We got our first quote for a client this week, and the rate was 1.76% of payroll.  On the surface, this seems really high compared to the 0.75% of payroll the state will charge.  However, if an employer gets an exemption, they won’t have to make contributions into the state system from October 1, 2019 through December 31, 2020, which is 15 months.  Doing some quick math (my 7th grade algebra teacher would be proud), you can figure out where the insured rate breaks even with the state rate, taking the pre-funding of the state plan into account.  The number is 1.6875%.

In other words, as long as the insured rate is less than 1.6875%, and the employer can get the exemption quickly enough not to do any pre-funding, the insured plan will cost less in total at the end of 2021 than the state plan with 15 months of pre-funding and 12 months of payments during 2021.

This is obviously overly simplistic.  It does not take into account several other factors such as the employer’s ability to use that money for something else in the meantime or any potential penalties and retroactive payments required if an employer gets and exemption and subsequently switches to the state plan.

In this case, our client is not going to accept the proposed private plan.  The math didn’t make sense.  We will show them other quotes when they become available.

Other Private Plan Options on the Horizon

This week, I’ve spoken to 2 additional insurance companies that are saying they will have insured products available “shortly.”  Both are requiring 25 or more employees and some other line of business, like life, LTD, or STD.  One of them told me they are going to mirror whatever the state rate is (now 0.75%) and NOT require any pre-funding.  That almost sounds too good to be true, so I’ll let you know when I actually see something in writing.

Should You Apply for an Exemption Now?

There is no right or wrong answer to this question, but we’ll all be able to do a more comprehensive analysis when there are more companies offering quotes for insured plans.  The deadline to apply for an exemption is December 20, but by then, most employers will probably already be making their first pre-funding contributions.

Our suggestion is to give it another week or two to see if there are any other options available if you’re planning to apply with an insured product.  If your self-funded plan and bond are ready to go, there’s probably no reason to delay the exemption application process.

The Connecticut Paid Family and Medical Leave Plan

A client with employees working in both MA and CT asked me to compare and contrast the two plans this week.  That’s beyond the scope of this post, but here are a couple of key differences with the Connecticut plan:

  • Benefits start January 1, 2022.
  • The payroll tax starts January 1, 2021 to fund the system.  The rate is 0.5% of payroll, and no employer contributions are required.
  • Family and medical leave benefits can be up to 12 weeks, but there is an additional 2 weeks for a pregnancy disability leave.

How to Count Your 1099 Employees

A different client asked me to explain how to calculate the number of 1099 employees for the PFML law.  If you read the final regulations, there seems to be a few different ways to interpret the instructions.  I sent the client’s question to the Department of PFML, and I was really pleased to get a quick and thorough response.  It’s pasted below along with the initial question.  Please forgive any grammatical errors.

(Me:)  A client sent me this email asking how to count the 1099 people for purposes of determining if his workforce has more than 50% 1099 people. He was trying to be funny, but he is pointing out there are multiple ways to interpret the way to calculate this number. Can you help us understand?

(Our Client:)  If in 2018, our company had 5 1099 employees who worked every pay period, 6 who worked 13 pay periods, and 3 who worked 10 pay periods. Assume 26 pay periods for the year.

How many 1099 employees does PVB have for purposes of PFML starting in Oct 2019?

A) 14
B) ~ 9
C) 5
D) 0
E) None of the above

If you pick (E) provide your own answer and let me know how you arrived at that number.

Department of PFML Response
The answer would be (B) -take the total number of checks issued: (5*26=130) + (6*13 = 78) + (3*10 = 30) = 238, divide this number by the number of pay periods: 238/26 = ~9Here’s another example -Employer A pays bi-weekly.

They have 15 W-2 employees that worked all 52 weeks last year- 15 W2 employees receiving 26 pay checks each over 26 pay periods. 15 x 26 / 26 = an average of 15 W-2 workers

They also had 20 1099-MISCs that each worked 2 weeks – 20 1099 employees receiving 1 check each over 26 weeks. 20 x 1 / 26 = an average of less than 1 1099-MISC contractor

In this scenario, 1099-MISC contractors do not make up half of the total average work count and are, therefore, not covered individuals. The employer’s workforce count is 15.


I hope this information is helpful.  If you’d like to talk about how the MA PFML will impact your company and what you should do next, feel free to call us at 866-724-0008 or click the link below.


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