Employee Benefits Question of the Week: Health Coverage and FMLA Leave

QUESTION: Do employers have to maintain an employee’s health benefits on FMLA leave? If the employee doesn’t pay his or her premium, can the employer cancel the employee’s health benefits?

ANSWER:    An employer is required to maintain group health coverage for an employee on FMLA leave on the same terms as if the employee had continued to work.  An employer may require employees taking FMLA leave to pay their share of health plan premiums, although they cannot be required to pay more than what they would have paid if they had remained actively employed. An employer is not required to maintain an employee’s health insurance coverage for extended leaves of absence, but it is required to follow its written policies and to apply them consistently.

An employee may choose not to retain group health plan coverage while on FMLA leave or may stop paying premiums for his or her coverage. Unless an employer has an established policy with a longer grace period, the employer is not required to maintain health coverage for an employee on FMLA leave if the employee’s premium payment is more than 30 days late. Employers must notify employees on FMLA leave before health care coverage is dropped for lack of premium payments.

Generally, an employer must provide written notice to the employee at least 15 days before coverage is to cease. The notice must explain that the payment has not been received and that coverage will be dropped on a date that is at least 15 days after the date of the letter, unless payment is received by that date.

Alternatively, when an employee stops making premium payments while on FMLA leave, the employer may decide to maintain the employee’s coverage by paying both its share and the employee’s share of the premium. After the FMLA leave ends, the employer may recover from the employee the portion of the employee’s share of the premium that it paid, even if the employee does not return to work following leave.

Upon the employee’s return from FMLA leave, the employer must unconditionally restore the employee to the same coverage and benefits that he or she would have had if he or she had not taken leave and stopped paying premiums. The employee cannot be required to re-qualify or meet any other conditions prior to being reinstated to the group health plan.

Aside from certain small employers, as well as the federal government and church organizations, employers must allow employees to elect the COBRA continuation coverage if health insurance coverage is terminated due to a leave of absence from work. Generally, for losses of health insurance due to leaves of absence, former employees will be entitled to 18 months of continued COBRA coverage.



Sources: Broker Briefcase “FMLA – Maintaining Health Benefits”


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