Prior to the introduction of the MA Paid Family Medical Leave Act, Massachusetts workers relied on group short-term disability plans to cover partial income replacement for a non-work-related illness or injury.
With MA PFMLA benefits set to go into effect on January 1, 2021, (and additional benefits under the act to begin July 1, 2021), employers may wonder how this affects the need for group STD benefits within an organization.
Should employers and employees still invest in voluntary group short-term disability benefits?
Short Term Disability or Group STD vs. MA PFML (MA Paid Family Medical Leave Act)
MA PFML is a statutory benefit that all employers in Massachusetts with more than 25 employees must provide. It is similar to Paid Family Leave in New York, which is written as a rider to DBL coverage. The Massachusetts law adds a medical component to combine medical disability coverage with family leave benefits.
Employers can write their benefits plan through the Commonwealth of Massachusetts or opt for a private plan that:
Meets or exceeds the benefits level and duration
Has the same or more lenient requirements
Offers the same or lower premiums than the state plan.
Costs will typically be shared between the employer and employee, although the employer may opt to fund more than their minimum percentage.
On the other hand, short term disability or Group STD is a voluntary benefit that can be funded by the employer or employees or shared between the two.
Do Massachusetts Workers Need Group STD Insurance Coverage?
Group short term disability coverage typically lasts until group long-term disability benefits (most commonly called “disability income,” or DI) begin. Your customers should know that MA Paid Family Medical Leave Act benefits offset disability insurance coverage; premiums may be lower for a group STD plan in Massachusetts since the MA PFML plan covers partial income replacement.
In New York, employers have the option to enrich DBL coverage to pay out more than the state maximum benefit. In Massachusetts, a group STD plan can fill this role. The MA Paid Family Medical Leave Act has a maximum weekly benefit cap of $850, which means that high-earners making more than $80,000 will receive a lower percentage of their income than others who are not maxing out the benefit.
As the owner of a Massachusetts business or a c-level executive or human resources director, investing in STD coverage for your employees can also benefit you should you become ill, injured, or unable to work.
Group STD Bridges the Gap Between Long Term Disability and MA Paid Family Medical Leave Act Benefits
In 2021, the MA Paid Family Medical Leave Act pays workers for up to 20 weeks of personal medical leave. However, if the worker already filed a claim for family leave or personal leave within the past calendar year, they may not be able to collect for the full 20 weeks this time around.
On the other hand, employees can collect STD income replacement for up to 26 weeks, regardless of other, unrelated leave.
Long-term disability insurance typically goes into effect 26 weeks after an employee becomes disabled. Short-term disability can provide income replacement for those six weeks (or more), when PFML runs out and before LTD kicks in.
Having financial peace-of-mind with income replacement can reduce stress on the employee and improve retention rates within a company. Combining PFML with Group STD and the best long-term disability insurance , plus ancillary benefits like dental, vision, and Group Life AD&D can help set a Massachusetts business apart. Being able to describe and explain these benefits to business owners can help Massachusetts brokers thrive in any economy.
FMLA vs. PFML in Massachusetts: Understand the Difference
It’s important to reiterate, as well, that PFML and other state paid family and medical leave programs are not the same as the MA Paid Family Medical Leave Act. FMLA only provides job protection, not income replacement. Additionally, some of the requirements and definition of a family member in Massachusetts may differ from the federal legislation. However, since FMLA in Massachusetts covers both partial income replacement and job protection, a Massachusetts employee should be able to take the necessary time off and know they will have a similar job description, position, and salary when they return to work.