FMLA Leave: Benefits Continue
When employees are on FMLA leave, employers must continue to provide health benefits for them. The same services your group plan provides on-the-job employees must be made available to those on FMLA leave. If you change coverage or adopt another plan that offers new services, such as dental care, while employees are on leave, you must make the new benefits available to them as well.
Employees may choose to forgo health coverage during their leave, perhaps to avoid paying their share of the premiums. However, if they do, you must reinstate them on the same terms without any qualifying period, physical exam or exclusion of pre-existing conditions.
But employees on leave don’t get a free health insurance ride. If they paid part of the health insurance cost while working, they would continue to do so while on FMLA leave. If premiums are raised for all workers, an employee on leave is required to pay the new premium either directly to you or to the insurance carrier.
What happens if employees on leave don’t pay their premiums? If payments are 30 days late, you can terminate coverage. However, you still have to reinstate them at the end of their leave and restore coverage and benefits to their former status without a waiting period or medical exam. According to FMLA regulations, you must notify an employee in writing that you didn’t receive payment for the health coverage premium, and you must wait 15 days after notifying the employee before you can cancel his or her coverage.
That’s why many employers wind up paying their workers’ share of the premiums while they’re on unpaid leave. If a worker’s insurance lapses, many insurance companies would treat the returning employee as a new customer. As such, a waiting period or medical exam may be required. Even more significantly, the carrier may not cover pre-existing conditions. If that were the case, the worker wouldn’t be returning to the same level of benefits he or she had before going on leave. In other words, you would be in violation of the FMLA.
If workers for whom you paid premiums never return, you can demand repayment, provided that they didn’t have a valid reason for not returning. Valid reasons include “continuation, recurrence or onset of a serious health problem” or “other circumstances beyond the employee’s control.”
Recommendation: Make it clear to employees taking unpaid leave what portion of their benefits plan they must pay. Often, workers don’t realize how much is deducted from their paychecks to cover health insurance. Let them know that they must still pay this sum even if they’re not receiving a paycheck. Don’t get into a situation in which you are paying employees’ premiums. Send them a warning explaining that because they haven’t made payments, their coverage is going to stop.
