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HR MATTERS E-TIPS
THIS WEEK'S E-TIP: Health Coverage Obligations under the FMLA
(Part 2 of 2)
September 18, 2007, Volume 9, No. 38
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 2 of 2)
Find out why you normally should not terminate health insurance for
nonpayment when an employee is on FMLA leave and the five steps you
should follow to implement the FMLA's health insurance requirements. |
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THIS WEEK'S E-TIP: Health Coverage Obligations under the FMLA
(Part 2 of 2)
In last week's E-Tips, you found out what kind of health
insurance
coverage the FMLA requires you to provide and how to collect the
employees' premiums during FMLA leaves. (If you missed that
issue,
please
click
here for a copy.)
This 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.
Termination for Nonpayment Allowed But Not Recommended
When an employee's premium payment is more than 30 days late,
you
are no longer obligated to maintain health insurance coverage.
(Additional limitations apply if the premiums are paid on a
pre-tax basis
through a cafeteria plan.) Before terminating the coverage, you
must
first give the employee at least 15 days written notice that the
premium is
late and that coverage will lapse if payment is not made by a
specific
date. The date you select must be at least 15 days after the
date of the
letter and at least 30 days after the payment was due.
Termination of coverage usually is not a smart option, however.
As
discussed in last week's E-Tips, you must reinstate a returning
employee
to full health care coverage, without any waiting periods or
medical
examination requirements. Therefore, as a practical matter, if
you have
an insured plan (as opposed to self-insured), you should try to
make
arrangements with your insurer to allow immediate reinstatement
of
coverage without any limitations or restrictions upon the
employee's
return to work. Otherwise, you could end up liable for the
employee's
health care coverage when the employee returns to work.
Alternatively, you may find it more practical to pay the
employee's share
of premiums and seek reimbursement when the employee returns to
work. The regulations allow you to recover any premium payments
made
on behalf of the employee in order to continue coverage after a
payment
is missed. This is true even if the employee chooses not to
return to
work. (See discussion, below.)
Recovery of Premiums if Employee Does Not Return to Work
If an employee does not return from an FMLA leave, you
ordinarily may
recover certain portions of the health insurance premiums paid
on the
employee's behalf. What you may recover depends on the reason
for
the employee's decision not to return and whether the employee
was on
unpaid or paid leave.
-- Employer's share of premiums. If an employee voluntarily
chooses not to return from an FMLA leave, you ordinarily may
recover
the employer's share of health insurance premiums paid on the
employee's behalf during the unpaid portion of the leave. For
example,
an employee who chooses to remain at home to care for a healthy
newborn, instead of returning to work, may be required to repay
the
premiums paid on her behalf during her unpaid leave. According
to the
regulations, any employee who comes back to work for at least 30
calendar days is considered to have returned to work.
However, you may not collect the employer's share of health
insurance
premiums from an employee who does not return to work because of
the
continuation, recurrence, or onset of a serious health
condition, or some
other reason beyond the employee's control. So, for example, an
employee who decides to stay at home to continue caring for a
newborn
with a serious health condition would not have to repay
premiums.
Similarly, a highly compensated or "key" employee who is denied
reinstatement by the employer does not have to repay the health
premiums. |
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-- Employee's share of premiums. The FMLA regulations allow
you to recover any payments made for the employee's portion of the
premiums during both paid and unpaid periods of FMLA leave. It does
not matter the reason the employee is not returning to work.
-- Recovering premium payments. The regulations offer two
suggestions about how you may recover the premium payments. You
may recover payments from any unpaid wages due the employee,
subject to federal minimum wage and state wage deduction laws, or by
initiating legal action against the employee. Note, though, that the
FMLA
does not provide any penalties for employees who fail to repay the
health
care premiums.
Have a Plan, Proceed with Caution
Clearly, you need to have a plan in place to comply with the FMLA's
health insurance continuation requirements. A well thought out
policy for
both
paid and unpaid leave will give clear guidance to employees and
reduce the chances of misunderstanding and legal exposure.
Here are five tips for dealing with health insurance continuation:
- Address both paid and unpaid leave in your policies. If the
employee is on paid leave, health insurance should continue as it
does
during regular worked time. For unpaid leave, you should set a
schedule
for payment of the premiums.
- Be sure that your employee handbook and all FMLA materials
given to the employee explain how FMLA leave will be handled. The
employee handbook should reflect the provisions of your insurance
plan.
- Discuss with your insurance carrier how an employee's return
to
work will affect coverage when a premium has been missed.
Ambiguity
or misinformation in the employee handbook could result in your
liability
for employee coverage.
- Consider paying for the employee's premium share to prevent
cancellation of coverage. Remember that you are authorized to seek
recovery upon the employee's return to work.
- Terminate health care coverage for nonpayment only after
careful analysis of the consequences to your organization and the
employee. Discuss the implications with your attorney before
making
the final decision.
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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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