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HR MATTERS E-TIPS
THIS WEEK'S E-TIP: Health Coverage Obligations under the FMLA
(Part 1 of 2)
Published by Personnel Policy Service, Inc.
"Your Policy and Compliance Experts Since 1972"
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THIS WEEK'S E-TIP: Health Coverage Obligations under the FMLA
(Part 1 of 2)
The FMLA regulations provide guidelines for health care coverage when
a covered employee takes leave. Learn what options are available for
continuation of coverage and collecting the employee's share of the
premiums. |
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THIS WEEK'S E-TIP: Health Coverage Obligations under the FMLA
(Part 1 of 2)
Untangling the Family and Medical Leave Act (FMLA) health care
coverage requirements can be a daunting task. What coverage must
be
maintained when an employee takes leave and what coverage is the
employee entitled to upon reinstatement? Who pays the premium is
another tricky area.
Although the FMLA allows you to terminate insurance coverage for
nonpayment of premiums or permits your employee to drop the
insurance while on unpaid leave, either scenario could cause
problems
when the employee returns to work and must be restored to full
coverage. A review of FMLA guidelines will help you make the
right
decisions about maintaining health care benefits and paying
premiums
when an employee requests FMLA leave. (Click
to download a free FMLA Checklist.)
In this week's E-Tips, you will find out what kind of health
insurance
coverage the FMLA requires you to provide and how to collect the
employees' premiums during FMLA leaves.
Next week, you will learn when you can terminate health
insurance
coverage for nonpayment of premiums and why you should not take
this
action. Plus, you will get five tips for implementing the FMLA's
health
insurance requirements.
FMLA Health Care Coverage Guidelines
The FMLA, which requires covered employers to provide up to 12
workweeks of leave to eligible employees for various family and
medical
reasons, has specific requirements about continuation of health
care
coverage when leave is taken and about how you should handle
payment of premiums. In addition, upon return to work, the
employee
must be fully restored to health care coverage subject to any
changes
that may have occurred. Each of these topics is addressed,
below.
-- Continuation of coverage. If you provide health care benefits
under a group health plan, you must provide the same health
benefits
during an eligible employee's FMLA leave as would have been
provided
if the employee worked throughout the leave. (If you do not
provide
insurance before the leave is taken, the FMLA does not require
you to
provide it during the leave.) In addition, your obligation to
continue
health benefits ends when the employee notifies you that he will
not
return to work from the leave. However, the notification must be
unequivocal in order to discontinue health benefits. If the
employee
indicates he may not be able to return to work, but wants to,
you must
continue to provide health benefits for the duration of the FMLA
leave.
Note, too, that employees on unpaid leave may elect to
discontinue
health insurance coverage (unless the employer pays the
employee's
share of premiums) during the unpaid period of FMLA leave.
However,
these employees still must be reinstated to the same insurance
benefits
when they return to work.
-- Payment of premiums. The FMLA requires you to pay the
premium on health care coverage on the same terms as you paid
the
premium before the employee took leave, paid or unpaid.
Therefore, if
you paid 80% of the premium before the employee took leave, and
the
employee paid 20%, you must continue to pay at least 80% of the
premium after the employee takes leave. You also may be more
generous, for example by paying the employee's share.
-- Reinstatement of coverage upon return to work. Upon return,
the employee must be restored to the same health benefits
coverage as
provided prior to leave, subject to any changes in benefit
levels that may
have occurred during the leave. A returning employee may not be
required to meet any qualification requirements normally imposed
for
entry or reentry into the group health plan, including any
preexisting
condition waiting period or medical examination requirements.
(This
requirement will be discussed in more detail in next week's
E-Tips.) |
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Collecting Premiums During FMLA Leave
The employer has a number of options for collecting the employee's
share of health premiums during FMLA leave. The key element is
whether the leave is paid or unpaid.
-- Paid leave. If the employee is using paid leave (such as accrued
vacation, personal, or sick time), the employee's share should be
paid by
the method normally used during any paid leave, such as by payroll
deduction. Note that you may require the employee to use paid leave.
-- Unpaid leave. If the employee is on unpaid leave, you have
several alternatives for premium payment and may require payment
according to one of the following schedules:
- Payment for the employee share due on the same date as
payroll deductions are made.
- Payment due on the same schedule as payments under
COBRA. (Click
to download a free Quick Guide to COBRA.)
- Prepayments at the employee's option and subject to special
IRS limitations if the payment is made on a pre-tax basis pursuant
to a
cafeteria plan.
- Payment due under the employer's existing rules for payment by
employees on unpaid leave, as long as the rules do not require
prepayment prior to any unpaid portion of the leave and do not
require a
higher premium than if the employee had continued working.
- Payment under a system voluntarily agreed to by the employer
and the employee, which may include prepayment of premiums (such
as
through increased payroll deductions when the need for leave is
foreseeable).
- Advance payment by the employer on the employee's behalf
during the leave.
You must provide advance written notice regarding the terms and
conditions under which the premium payments must be made.
Next week's E-Tips: Find out when you can terminate health insurance
coverage for nonpayment of premiums and why you should not take this
action. Plus, five tips for implementing the FMLA's health insurance
requirements. |
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^^^^^^^^^^^^^^^^^^^^^ From Your HR Matters E-Tips Editors
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Subscribers to the
Personnel Policy Manual and HR Policy Answers on
can find more information about the FMLA and health insurance
continuation coverage in Leaves of Absence, Chapter 703, note 41.
Not a subscriber? If you would like to order one of our policy
chapters,
go to:
http://www.hrpolicyanswers.com.
If you have any questions, please call us at 1-800-437-3735. We'll
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happy to help you. |
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Information provided in HR Matters E-Tips is researched and reviewed
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