As an employer, you likely have many questions about the requirements around purchasing a paid family medical leave (PFML) surety bond. This bond is mandatory if you choose to self-insure your PFML program rather than paying into the state fund. Obtaining a bond that fully complies with your state’s regulations may feel complicated at first, but it doesn’t have to be a stressful process! This comprehensive FAQ blog post will walk you through the key questions to help you buy the right MA paid family medical leave bonds for your business needs.
What Is a PFML Surety Bond?
A PFML surety bond is an insurance policy you purchase to guarantee that you’ll pay PFML benefits owed to your employees. It protects your workers if your business can’t cover those costs for any reason, such as lack of sufficient reserves. The bond must meet your state’s minimum coverage requirements to be considered valid. It provides a backstop to cover PFML claims in case your self-insured reserves run out.
Who Needs to Buy a PFML Bond?
Any employer with approved self-insured PFML plans must buy a surety bond – this is mandated by state and federal law. Typically, this includes businesses with 25 or more employees as of January 1st who don’t opt into the state PFML insurance fund. However, the specifics can vary in each state, so be sure to carefully check your local laws and regulations to understand the requirements you must meet.
When Do I Need to Have the Bond in Place?
You must purchase a compliant PFML bond before the effective start date of your self-insured plan. For plans starting on January 1st, you’ll need to proactively buy your bond no later than November 1st of the prior year. Missing this important deadline can lead to severe penalties from the state, so be sure to start the buying process early and build in plenty of time to find the right bond issuer for your needs.
How Much Coverage Do I Need to Buy?
The surety bond must provide a minimum amount of coverage as determined by your state’s PFML laws. This ensures you’ll have sufficient funds accessible to continue paying PFML benefits even if your reserves are fully depleted. Typical minimum bond amounts range from $50,000 up to $150,000 or more, depending on your state. Your specific business size, number of employees, and PFML claims history will determine the exact bond amount required in your situation.
Where Can I Buy a PFML Surety Bond?
You can buy a compliant PFML bond from various sources, including many insurance brokers and agents who sell surety bonds. You can also contact national or regional surety bond companies directly to inquire about purchasing a bond. Be sure to find an issuer who is licensed in your state and thoroughly familiar with the specific PFML coverage requirements you must meet.
What Information Do I Need to Buy a Bond?
The surety bond issuer will request certain key details about your business to generate a premium quote and initiate the buying process. This generally includes your full legal name and address, federal tax ID number, total number of employees, the start date for your self-insured PFML plan, and your state’s required minimum bond coverage amount. Having this information readily available can help speed up the application process.
What Does a PFML Bond Cost?
The annual premiums for PFML surety bonds are calculated as a percentage of the total bond amount or coverage limit. This premium percentage can range from 1% to 3% or more, depending on multiple factors. These include your company’s size, industry, financial health, credit score, years in business, and PFML claims history, among other variables. Be sure to ask potential bond issuers to provide a premium estimate before committing, so you can budget properly.
How Long Does the Bond Last?
PFML surety bonds are designed to be continuous policies, renewing annually until canceled by you or the bond issuer. Make sure to add to your calendar your renewal date and plan for rate changes at renewal time after the bond company completes an updated underwriting review. Maintaining your required bond without any gaps in coverage is critical for staying compliant.
Acquiring suitable CT paid family medical leave bonds is a mandatory and vital part of self-insuring your paid family medical leave program. Following this comprehensive FAQ guide will help you secure the compliant bond coverage you need, properly budget for premiums, and keep your business protected. Reach out to experienced insurance advisors for personalized guidance in obtaining the right PFML surety bond for your company’s specific situation and risk profile. With the proper bond protection secured, you can then focus on smoothly administering your self-insured PFML program on an ongoing basis.