QUESTION: Can an employee change his or her benefit plan elections when taking FMLA leave? If so, how may employee benefit contributions be made during FMLA leave?
ANSWER: Yes. The commencement of FMLA leave is an event that allows an employee to revoke his or her existing Section 125 elections, including health and dependent care FSA elections. The employee’s return from work following FMLA leave is also an event that allows an employee to modify his or her Section 125 elections, including health and dependent care FSA elections.
While on FMLA leave, an employee may be permitted to pay his or her employee contributions on a pretax basis in one of three ways:
- Pre-pay the amount that would be owed during FMLA leave (provided the FMLA leave does not extend past the end of the Section 125 plan year);
- Pay the amount that is due each month while on FMLA leave (if receiving disability or vacation pay during leave); or
- Catch up on contributions upon return from leave.