Don't forget: FMLA applies to the employer health plan
An employer is generally subject to FMLA if they have 50 or more employees during 20 or more workweeks in the current or previous calendar year. An eligible employee can take unpaid, job-protected leave because of the birth or adoption of a child, to care for an immediate family member’s or their own serious health condition, for a qualifying exigency or to care for a covered servicemember.
An employer subject to FMLA must maintain group health plan benefits for an employee out on FMLA on the same terms and conditions and premium cost sharing as if the employee were still active. This means the employer can’t cancel coverage or make the employee pay 100% of premiums while on leave. When the employee returns from FMLA leave, the employer must restore the employee's group health coverage.
The “group health plan” here includes the medical plan, but also dental, vision, prescription drug, health FSA and EAP coverage if it provides medical care. However, it does NOT include group term life or AD&D, disability, dependent care FSA or voluntary benefits. This means an employer is required to maintain some benefits but not others (of course, they may be more generous for ease of administration).
For any employee taking unpaid FMLA, the employer has three payment options for employees who have no paycheck from which to deduct premiums: pre-payment, installment payments (typically by personal check), or catch-up payments upon return from leave. Whichever method is chosen, advance written notice must be made to employees about the terms and conditions under which premiums must be paid if they decide to continue coverage while on leave.
Under the “pay as you go” option, if the employee stops paying during FMLA leave, then the employee's benefits would stop (subject to the grace period and written notification for late payments). If the employer decides to continue coverage for an employee who fails to pay, the employer can recoup the employee's share upon reemployment. However, if coverage is dropped due to the employee’s failure to pay premiums, the employer will have to restore coverage if and when the employee comes back to work.
Under the catch-up option, if the employee decides not to return to work, any premiums which the employer is permitted to recover are considered a debt owed by the employee to the employer. That said, it may be difficult to recoup premiums paid during unpaid leave and isn’t allowed in every situation. In other words, the employer’s right to recover premiums would be prevented when the employee’s return is because of the serious health condition of the employee or immediate family member, the need to care for a service member, or because of other circumstances beyond the employee’s control.
With all the complex details, it’s important for employers subject to FMLA to implement and follow policies and procedures for dealing with FMLA leave, especially as it relates to health plan coverage.