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Requirements for self-insured private paid leave plans

An employer seeking an exemption from making Paid Family and Medical Leave (PFML) contributions with a self-insured private plan must provide a surety bond. These employers must furnish the surety bond running to the Commonwealth in an amount based on the employer’s Massachusetts workforce size.

Table of Contents

General information about paid leave bond coverage for self-insured applications for exemptions

An employer seeking an exemption from making paid leave contributions with a self-insured private plan must submit a Self-Insured Insurance 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. 

Additional Resources

Benefits Bond Coverage

A surety bond must be completed on the designated form approved by the Department (Paid Family & Medical Leave Benefits Bond 2021- revised 6/30/2021). If the surety bond intends to cover multiple entities, please list ALL covered entities on the form and if necessary, obtain surety bond riders to ensure coverage for all entities listed on the form. Please note, the effective date of the bond must align with the effective date of the exemption for which you are applying for.

For example:

If you wish to apply for an exemption to cover 6 entities for an exemption effective date of October 1, 2021, you should submit the form listing all 6 entities and ensure the bond submitted covers all entities listed. Furthermore, the effective date of the bond should list October 1, 2021, in order to align with the effective date of the exemption application. You should file this form with a unique exemption application for each entity listed you wish to cover. The Department cannot approve more than one entity per application for exemption.

What's needed to calculate the Bond Value

Your surety bond exists to cover the Department 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 is associated with medical leave ($10,000) and the remainder family leave ($6,000).  

Bond Formula:  

  • Family leave exemption required surety amount 

    • $6000 * (total workforce rounded up to the next increment of 25 /25) 

  • Medical leave exemption required surety amount 

    • $10,000 * (total workforce rounded up to the next increment of 25 /25) 

  • Combined exemption required surety amount 

    • $16,000 * (total workforce rounded up to the next increment of 25 /25) 

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, if they account for more than 50% of your workforce from the previous completed calendar year. 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

Applying for a Self-Insured Plan exemption

You may apply for an exemption electronically using your MassTaxConnect account. You will need your Self-Insured Insurance Declaration 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.   

Electronic surety bond submissions are an acceptable form of proof. You aren't required to mail a copy of your original bond to the Department.  

If you are applying for a PFML exemption for multiple entities see here for exemption Information for Multi-entity Employers 

Additional Resources

Reporting a change to your approved exemption

If you are switching your exemption to a purchased private plan before your exemption renewal period, you must inform the Department of this change within 30 days. To inform the Department, you must send an e-message via your MassTaxConnect account explaining that you are switching to a purchased private plan offered by an insurance carrier and attach the required documents. If you need further assistance with providing us this information, please contact the Department of Paid Family and Medical Leave's Contact Center at (617) 466-3950 during regular business hours. 

When switching to a purchased private plan, you must attach a completed Massachusetts Paid Family and Medical Leave Confirmation of Insured Policy Form Number with the carrier information. For further information on what is required for a purchased private plan exemption request please see here

Contact

Phone

For questions about benefits and eligibility: (833) 344-7365

Department of Family and Medical Leave - Hours of operation: Monday-Friday, 8 a.m - 5 p.m.

Fraud Reporting Hotline: (857) 366-7201

Department of Family and Medical Leave - Hours of operation: Monday-Friday, 8 a.m - 5 p.m.

For questions about contributions and exemptions: (617) 466-3950

Department of Revenue - Hours of operation: Monday-Friday, 8:30 a.m. - 4:30 p.m.

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