Ask the Experts: FMLA and Premium Payments

Question: What benefits must be continued while an employee is on Family and Medical Leave Act (FMLA) leave? What should we do with an employee who is not making his share of the premium payments while out on leave?

Answer: Family and Medical Leave Act (FMLA) regulations require that employers continue to provide group health benefits under the same terms and conditions as if the employee was actively at work. There is no requirement under the FMLA to continue other types of benefits offered by the employer, so whether or not an employee’s other benefits continue depend on an employer’s established policy. If the employer elects to continue other benefits not required under FMLA, this might require a modification to the underlying plan or contract provisions to allow for benefits continuation while the employee is not actively at work. Any benefits that would be maintained if the employee was on another form of leave should be maintained while the employee is on FMLA leave.

Part of the requirement to continue health insurance benefits “under the same terms” means that both the employer and employee must continue to pay their portions of the group health insurance premium, unless the employer has a different policy for managing premium payments during leaves. The employer is required to notify the employee of the payment requirements while on leave, including the amount of the payment, date due, and where the payment should sent. If the employee fails to pay his or her portion of the premium, the employer may be able to suspend group health benefits for the remainder of the FMLA leave.

In order to suspend health benefits for someone on FMLA leave, the employer must allow the employee a 30-day grace period to make payment after the original payment due date. The employee must receive written notice at least 15 days prior to the actual suspension, and the best employer practice is to send a pending suspension notice once the employee is 15 days past the payment date. One important item to note is that even if an employer suspends an employee’s health coverage under these terms, the employer is required to restore coverage without penalty or delay once the employee returns from FMLA leave to a level of coverage that is equal to what the employee had prior to the leave and had not missed premium payments. If the employee does not return from FMLA leave, the employee whose coverage was suspended for failure to pay premiums during the leave would be eligible for COBRA continuation coverage. Even though benefits other than group health insurance need not be continued while an employee is on FMLA, these benefits must also be restored without limitation or waiting period when the employee returns from FMLA.