Massachusetts PFML Is Restructuring Employer Contributions in 2027 — Here's What to Know
Massachusetts PFML Is Restructuring Employer Contributions in 2027 — Here's What to Know
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Article Summary
Starting January 1, 2027, employer PFML contributions shift from medical leave to family leave. Employee benefits don't change, but payroll configurations will need to be updated before year-end. New contribution rates drop October 1, 2026, plan your OneDigital consultant review now.
Massachusetts employers have another PFML change coming.
Starting January 1, 2027, Chapter 101 of the Acts of 2026 moves employers’ required contributions from medical leave to family leave.
The benefits themselves do not change, but the underlying structure does, and payroll teams will need to act before year-end 2026.
What's Changing
Right now, employer contributions fund the medical leave side of the program. Under the new structure, that flips:
|
Contribution Category |
Family leave |
Medical leave |
Small employer exemption |
|---|---|---|---|
|
Employer Share |
At least 60% |
0% |
Shifts to family leave |
|
Employee Withholding |
Up to 40% |
Up to 100% |
No longer applies to medical leave |
At a glance
- Family leave becomes the contribution category that carries the employer obligation.
- Medical leave becomes employee-funded, with up to 100% withheld from employees.
- Small employers with fewer than 25 covered individuals should note that the exemption shifts categories as well.
Why the Change?
It comes down to IRS guidance. Revenue Ruling 2025-4 created an adverse tax treatment scenario for employer-funded medical leave benefits, essentially treating those contributions as taxable wages.
The restructuring mitigates that risk without touching employee eligibility, weekly benefit amounts, or leave duration.
Employees will not see a difference in what they receive, only in how the funding is categorized.
What Should Employers Do Now?
Massachusetts has published the 2027 total contribution percentages on October 1, 2026. Now that rates are out, employers will need to update payroll configurations and vendor settings before January 1, 2027.
Our recommendation: schedule time with your OneDigital consultant in October. That is when the new rates will be available, and it is the right moment to review what the restructuring means for your specific plan, workforce size, and payroll setup before open enrollment season gets in full swing.
Do not wait until the end of the year to sort this one out. A short conversation in October puts you well ahead of the deadline.
Recommended Next Step
Prepare for 2027 now. Schedule a payroll review with a OneDigital consultant to help ensure your payroll settings and employee withholdings are ready well before the effective date.