Maine’s PFML Private Plan Substitution: What You Need to Know

Requirements under Maine’s Paid Family and Medical Leave (PFML) program have increased the administrative burden for small business owners. One hurdle of the program in particular has to do with private plan substitutions for Maine’s PFML program.

At Paper Trails, we’re passionate about helping small businesses navigate these kinds of challenges, easing the burden, and giving you peace of mind. This guide will walk you through everything you need to know about Maine PFML private plans, from the basics of what they are to how they affect your payroll operations. By the end, you’ll feel confident in understanding your responsibilities if you decide that the private plan substitution is right for your business. Let’s begin.

What is a private plan under Maine PFML?

Under Maine’s Paid Family and Medical Leave law, businesses have two options for providing these benefits: participate in the state’s plan or opt for a private plan that is certified by the Maine Department of Labor as “substantially equivalent” to the state plan.

The private plan substitution gives businesses flexibility in how they deliver benefits. There are two main types of private plans:

1. Fully Insured Plans: Purchased through an insurance provider certified by the Maine Bureau of Insurance.
2. Self-Insured Plans: Administered directly by the employer, often with support from a third-party administrator.

Regardless of which type of plan an employer selects, it must meet strict requirements to ensure it offers rights, protections, and benefits that are at least as comprehensive as those provided by the state plan.

The private plan approval process

Before you can switch to a private plan, there’s a structured approval process that you must follow:

1. Register on the Maine Paid Leave Portal: Even if you’re opting for a private plan, the first step is to register your business on the Maine Paid Leave Portal. Every employer, regardless if they use the state plan or private plan, needs an account and ID number to proceed. This ID will also be necessary for payroll reporting and compliance.
2. Complete the Application: Applications for private plan substitutions open on April 1, 2025, and must be submitted online through the Maine Paid Leave Portal. You’ll need to provide detailed documentation, such as:
   • For fully insured plans, a copy of your insurance policy from a certified provider.
   • For self-insured plans, a comprehensive plan document, a surety bond, and proof of compliance with all requirements.
3. Pay Fees: There is a non-refundable $250 application fee. If your application is approved, there’s an additional $250 administrative fee.
4. Wait for Approval: The Department of Labor will review your submission to ensure it meets the “substantial equivalency” standard. If your plan is approved, the substitution becomes effective at the start of that quarter. For example, if your business is approved for a private plan substitution on April 20th, 2025, the plan goes into effect starting on April 1st, 2025. If the approval happens less than 30 days before the quarter ends, the substitution will take effect at the beginning of the following quarter. For example, if your business submits an application for a private plan substitution on June 10th, 2025, the plan doesn’t go into effect until July 1st, 2025.

How do PFML private plans affect payroll?

For employers, payroll processes are closely tied to PFML administration. If you’re a Paper Trails client or handling payroll independently, here’s what you need to know:

1. Continue Contributions Until Approval: Even if you apply for a private plan on April 1, you must continue withholding PFML contributions from employees and pay the employer portion (if necessary) until the application is approved. At that point, you may refund or reverse employee and employer contributions. This ensures compliance with state rules while your application is under review. If the application for substitution is submitted less than 30 days prior to the end of a quarter, the exemption is effective on the first day of the quarter following when the application for substitution was submitted, assuming it is approved. Contributions for the entire quarter in this case will still need to be submitted to the state. For example, if your business submits an application for a private plan substitution on June 10th, 2025, the plan doesn’t go into effect until July 1st, 2025, so you will need to withhold contributions and remit payment through June 30th, 2025.
2. Provide Your Approval Notice: Once your private plan is approved, you’ll receive an exemption certificate. This must be shared with your payroll provider (like us at Paper Trails) so your payroll processes can be adjusted accordingly. Be prepared to provide your account ID from the Maine Paid Leave Portal as well.
3. File Quarterly Reports: While private plan employers are exempt from paying contributions, wage reports still need to be filed quarterly. Your payroll provider may handle these reports for you (Paper Trails will do this for our clients), but the responsibility to ensure they’re accurate and on time ultimately rests with the employer.
4. Renewal Every Three Years: Approval for a private plan substitution is valid for three years. Employers must apply for renewal at least 30 days before the expiration date to avoid lapses in compliance.

Other compliance requirements

Switching to a private plan doesn’t mean you’re off the hook for all administrative responsibilities. Here are the key requirements to keep in mind:

1. Quarterly Wage Reports: All employers, whether using the state plan or a private plan, must submit quarterly wage reports. For businesses with an approved private plan, the reports will reflect a zero contribution rate, but they still need to be filed on time.
2. Data Reports: Each year, by July 1, you’ll need to submit an annual performance data report for your private plan. This report must detail key metrics to ensure your plan is functioning as required.
3. Job Protection and Reinstatement: Employees using Maine PFML benefits are entitled to job protection and must be reinstated to their prior or equivalent position when they return from leave. Employers must strictly adhere to this requirement.
4. Audits and Appeals: The state retains the right to audit private plans to confirm they remain substantially equivalent to the state plan. If a plan falls short, it may be revoked, and the employer will be required to revert to the state program for a minimum of three years. Employers and employees also have rights to appeal decisions related to benefits or compliance.

Key considerations of the types of plans

Fully Insured Plans: These plans are purchased through certified insurance providers. As of March 2025, Maine has approved a range of carriers, such as Guardian Life, Prudential, and Unum, to name a few. You can find a full list here. Employers need to select a plan, submit the policy for certification, and ensure ongoing compliance.

Self-Insured Plans Employers offering self-insured plans face more complex requirements. They must:

• Draft a detailed plan document that meets substantial equivalency standards.
• Obtain a surety bond to cover potential premium contributions if the plan is terminated.
• Handle claims administration or contract with a third-party administrator.

Self-insured plans offer flexibility but come with greater administrative responsibility, so they’re best suited for employers with the resources to manage them effectively.

What happens if a private plan is revoked or denied?

Denial or revocation of a private plan substitution can occur for several reasons, such as failing to submit required reports or violating the terms of the approved plan. If this happens:

• Employers must revert to the state PFML program immediately.
• Any missed premium contributions may be recouped from the surety bond (for self-insured plans).
• Employers cannot reapply for another substitution for three years.

Understanding these risks is critical to maintaining compliance and protecting your business.

Final thoughts

Private plan substitution for Maine’s PFML program offers an alternative path for employers who want more control over their employee leave benefits. But with this flexibility comes additional responsibilities, from applying for approval to filing ongoing reports. At Paper Trails, we’re dedicated to helping small businesses navigate these processes, ensuring compliance while streamlining payroll and HR tasks.

Whether you choose the state plan or a private plan, the most important thing is staying informed and prepared. If you have questions about how PFML affects your business or need help managing payroll, we’re here to guide you every step of the way.