MA PFML: Quick Tips on Integrating New Benefits With Other Leaves

February 16, 2021

Leave laws keep getting more complicated. For employers in Massachusetts, that means you can expect to see complex leave interactions now that the state’s paid family and medical leave program is in effect as of Jan. 1, 2021. Here’s what you need to know about integrating PFML with disability and other leaves.

Integrating PFML With Disability Benefits

One common interaction that employers will see is when short and/or long term disability benefits run concurrently with Massachusetts PFML. In these situations, typically the paid medical leave is the primary leave — which means it pays first. Most disability carriers will estimate the paid medical leave benefit amount and then offset it from the STD or LTD policy. The offset is usually dollar for dollar — paid medical benefits subtracted from STD/LTD benefits.

Common leave and benefit interactions:

  • STD and/or LTD reduced by PFML
  • Accrued paid leave substitutions
  • Employer reimbursements

Less common interactions:

  • PFML reduced by STD
  • PFL reduced by STD
  • PFML reduced by LTD
  • Other government programs, military benefits, or state or federal disability
Massachusetts PFMLCommon Short Term Disability Plans
12, 20 or 26 weeks per rolling 52 weeks90- or 180-day benefit period per claim
Up to 80% income replacement (for lower wage earners)60-70% income replacement
Up to $850 per week$1,000-5,000 per week

How do overlapping leaves and their interactions affect STD benefits? In some cases, STD may only pay out the minimum benefit, due to the offset of paid medical benefits that the employee receives. Or it may pay a benefit that’s much lower than the regular STD benefit.

Here’s an example of the STD benefit when the full PFML benefit of $850 is payable and offset by deducting it from the maximum STD benefit the plan provides.

Scenario: Concurrent PFML and Short Term Disability*

STD Max Benefit AmountSTD Benefit Received After PFML Offset
$1,000$150
$1,200$350
$1,500$650
$2,000$1,150
$2,500$1,650
$3,000$2,150

Interactions With Accrued Paid Leave

The Massachusetts PFML law refers to employer-sponsored sick leave, annual leave, PTO, vacation and personal leaves as Accrued Paid Leave. Two key points to remember:

  • It’s the employee’s choice whether to use Accrued Paid Leave.
  • Accrued Paid Leave is a substitute for PFML.

However, there are differences in how Accrued Paid Leave is treated, depending on whether the employer uses the state PFML program or a private plan like The Standard’s.

Limitations Under the State PFML Plan

  • PFML is not paid while Accrued Paid Leave is received. But the time taken is deducted from the PFML entitlement bank.
  • An employer that pays Accrued Paid Leave benefits won’t be reimbursed by the state.
  • PFML is not payable if the employee is receiving Accrued Paid Leave in any amount. This prevents topping up benefits to 100% wage replacement.
  • Accrued Paid Leave can be taken during the PFML seven-day waiting period, because the Accrued Paid Leave and PFML aren’t paid at the same time.
  • The seven-day waiting period is deducted from the employee’s PFML entitlement bank. This is true whether or not the employee is using Accrued Paid Leave.

Advantages Under Our Private Massachusetts PFML Program

Employers switching from the state plan can opt into a private plan at the beginning of any quarter. Here are some advantages The Standard’s plan offers:

  • PFML may be paid while the employee receives Accrued Paid Leave, and the time taken is deducted from the PFML entitlement bank.
  • When accrued paid leave and PFML are taken concurrently, the total paid leave and PFML benefits combined should not equal more than the employee’s current wages
  • Employers may also choose to be reimbursed for Massachusetts PFML — when they’ve paid at least the PFML benefit as Accrued Paid Leave.
  • Accrued Paid Leave can be taken during the PFML seven-day waiting period.
  • The seven-day waiting period is deducted from the employee’s PFML entitlement bank.

Scenario: Accrued Paid Leave and Employer Reimbursement Under Our Private Plan*

Below is a straightforward example of how Accrued Paid Leave and employer reimbursement work when there are no disability benefits to integrate.

Private Plan Scenario: Accrued Paid Leave and Employer Reimbursement*

Employee’s Situation

  • Scheduled surgery will result in being unable to work for 12 weeks.
  • 7 weeks of available vacation.
  • Employee chooses to use all 7 weeks of vacation (which is Accrued Paid Leave) beginning on the first day of the leave.

Benefits Employee Receives

  • 7 weeks of full salary due to the use of vacation.
  • Then 5 weeks of PFML benefits up to $850/week.

Employee’s Remaining PFML Benefits

The employee used a total of 12 weeks of PFML and is eligible for another 8 weeks of PFML in the same benefit year for a personal medical condition. (20 weeks of total available paid medical leave, minus 12 weeks of PFML.)

Private Plan Solution

Weeks 1-7

  • The employer is eligible for reimbursement for the 7 weeks of vacation pay (because employer paid at least the PFML Benefit amount).
  • The first 7 weekly PFML benefit checks go to the employer.

Weeks 8-12

  • After the Accrued Paid Leave ends, the PFML benefit checks go directly to the employee.

Less Common Offset Scenarios

The following offset scenarios are less common and may need plan review and consideration on a case-by-case basis:

  • STD benefits actually received may be used to reduce the PFML benefit via backdoor integration:
    • Non-integrated STD plans (no deductible income like SD, SSDI)
    • PFL runs concurrent with STD
  • LTD benefits actually received may be used to reduce the PFML benefit dollar for dollar.
  • Other government programs, military benefits, or state or federal disability benefits may be used to reduce PFML dollar for dollar.

One Simple Solution: Partner With an Absence Management Program

These examples for Massachusetts PFML barely skim the surface of the complex new landscape employers are facing. One way to simplify administration and to support compliance? Partner with a carrier who offers an Absence Management program.

To see a good example of the support these programs may offer, check out The Standard’s Absence Management Services. And in states that offer the option, consider choosing a private-plan PFML solution. That may give your employees better benefits and a more positive experience.

See What’s Next

Visit our interactive U.S. map to get details on PFML programs and legislation for every state. And sign up to receive email alerts about newly posted content.

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* Scenarios are hypothetical and for illustration purposes only.

 

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