Are You Ready for the Massachusetts Paid Family and Medical Leave?
Be Prepared for the January 1, 2021 Law
Starting in 2021, the state of Massachusetts will offer paid family and medical leave benefits to employees. Payroll deductions for employees begin October 1, 2019. This program allows employees to receive a portion of their pay while on leave to recover from an illness or injury, bond with a new child, take care of a sick or injured family member or certain military-related events.
- Eligible employees: Consistent with the financial eligibility requirements for unemployment insurance.
- Benefit percentage: Dependent on if employee earns more or less than 50% of the Massachusetts average weekly wage.
- Elimination period: Benefit payments begin on the 8th day.
- Maximum benefit payment period (within a 52 consecutive week period): 12 weeks family leave. 26 weeks family leave to care for a covered service member. 20 weeks medical leave. 26 weeks in aggregate for family and medical leave. Consecutive leave isn’t required. Intermittent leave is acceptable (e.g. each Tuesday for physical therapy appointment).
- Maximum benefit: $850/week for the first year. 64% of the state average weekly wage annually thereafter. In many cases it’s important to maintain your current short term disability program so higher wage earners who gross more than $70,000 annually will not be impacted and employees will have the ability to receive more than 26 weeks’ worth of benefits. Carriers will be able to adjust your rates to accommodate for the state being primary payer.
Premium payment
The premium cost for the family and medical leave benefit is 0.75% of employee wages up to the Social Security cap. The medical leave contribution is 0.62% of payroll. The family leave contribution is 0.13% of payroll. Who pays the premium depends on the size of the employer:
- Employer has less than 25 employees – Employees pay premiums.
- Employer has 25+ employees – Employees and employers share the premium. Contribution rates are as follows:
- Medical leave – 60% employer, 40% employee
- Family leave – 0% employer, 100% employee
Employees aren’t charged more than the state’s rate. Employers may choose to pay more to give their employees coverage beyond the minimum requirements of the state plan.
Let’s look at an example
Olivia is expecting her second child soon. While her oldest son is in pre-school, she works for a large retail chain in Massachusetts and is paid $14.00/hour. Her schedule is consistent at 30 hours/week — making her weekly pay $420. Olivia gives birth to her baby and doesn’t experience any complications from the birth. Because of the Massachusetts paid family and medical leave, she is guaranteed 12 weeks of paid family leave. Because Olivia makes less than 50% of the state average weekly wage, she receives 80% of her average weekly wage, which is $336/week for a total of 12 weeks.
Olivia is expecting her second child soon. While her oldest son is in pre-school, she works for a large retail chain in Massachusetts and is paid $14.00/hour. Her schedule is consistent at 30 hours/week — making her weekly pay $420. Olivia gives birth to her baby and doesn’t experience any complications from the birth. Because of the Massachusetts paid family and medical leave, she is guaranteed 12 weeks of paid family leave. Because Olivia makes less than 50% of the state average weekly wage, she receives 80% of her average weekly wage, which is $336/week for a total of 12 weeks.
For more information please refer to the Massachusetts Department of Family and Medical Leave (DFML)
https://www.mass.gov/guides/prepare-for-paid-family-and-medical-leave
https://www.mass.gov/guides/prepare-for-paid-family-and-medical-leave
Information in this letter is courtesy of Principal Life Insurance Company