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Requirements for Self-Insured Paid Leave Plans

Self-insured employers seeking an exemption from making Paid Family and Medical Leave (PFML) contributions must provide a bond. These employers must furnish a bond running to the Commonwealth in an amount based on MA workforce size.

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General information about paid leave bond coverage

A self-insured employer seeking an exemption from making paid leave contributions must submit a self-insured declaration document detailing that their plan meets necessary requirements and furnish a surety bond running to the Commonwealth of Massachusetts in an amount based upon its Massachusetts workforce size.  

As of July 2020, our bond calculation formula and bond forms have changed for exemptions. If you have applied or plan to apply for a self-insured exemption after July 2020, please be sure to use the correct bond form and instructions provided below. 

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Benefits Bond Coverage

For 2021 Bond Renewals 

The Department is now accepting updated bonds for self-insured plans that will be in effect on January 1, 2021, when benefits are available. The bond for 2021 plans will need to be sufficient to cover the estimated cost of benefit payments for one year.  

What's needed to calculate the 2021 Bond Value

Your surety bond exists to cover the DFML in the case where an employer with a private plan fails to meet their benefits obligations under paid leave. The bond amount, therefore, is based on the expected cost of benefits payments you should owe as an employer.  

The Department estimates that for every 25 employees covered, the total cost of benefits is $16,000 for a combined family and medical leave plan. The majority of this cost will be associated with medical leave ($10,000) and the remainder family leave ($6,000). 

CY 2021 Formula:  

  • Family leave exemption required surety amount
    • $6000 * (total workforce/25)
  • Medical leave exemption required surety amount
    • $10,000 * (total workforce/25)
  • Combined exemption required surety amount
    • $16,000 * (total workforce/25)

CY 2021 Bond Calculator:

The Department has created a bond calculator to help businesses determine the bond amount required for the exemption type they are applying for. Bonds are administered in increments of 25, so our bond calculator will round up your workforce total appropriately. For example: if you have a workforce of 10, your workforce will be rounded up to 25 for your bond calculation. If you have a workforce of 230, your workforce will be rounded up to 250 for your bond calculation.

To use the bond calculator, you will need your average number of annual W-2 employees and 1099-MISC workers from 2019. Once you have determined your average workforce, enter that number into the calculator where it is requested and the calculator will give you the bond amount required for the exemption type you are applying for.

 

Examples:

Workforce Count 25 100 500 1,000 10,000
Family Leave $6,000.00 $24,000.00 $120,000.00 $240,000.00 $2,400,000.00
Medical Leave $10,000.00 $40,000.00 $200,000.00 $400,000.00 $4,000,000.00
Both $16,000.00 $64,000.00 $320,000.00 $640,000.00 $6,400,000.00

What happens at the end of the bond period?

If your self-insured plan is not in force on January 1, 2021, you will be responsible for remitting paid leave contributions retroactive to October 1, 2019. If you do not renew by October 1, 2020, the DFML will seek to collect retroactive contributions using the surety bond you originally submitted, and may pursue other collections actions permitted by law. 

Renew your exemption using your paid leave account in MassTaxConnect by October 1, 2020, to ensure coverage remains in effect under your private plan. To renew you will need a copy of your surety bond and a self-insured declaration document. 

Sign up for our newsletter for updates and read more about the requirements for self-insured plans. 

Applying for a Self-Insured Plan exemption

You may apply for an exemption electronically using your MassTaxConnect account. You will need your Self Insured Identification document and your surety bond form

A self-insured bond form must be executed by both an employer and an authorized surety. You may upload a scanned copy of your complete bond form at the time of application. If you have already been provisionally approved for a self-insured exemption, further instructions about how to upload the bond form will be sent to your MassTaxConnect account. 

Please include your Federal Employer Identification Number (FEIN) on all bond submissions. An electronic surety bond that clearly displays both a signature of acceptance and the seal of the surety is acceptable. The signature and seal must be visible on all bonds.  

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