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Question: Does an employee on workers’ compensation need to pay for health benefits while on leave? If so, for how long can she remain on our plan until her plan is terminated and we must offer her COBRA? 

Our View:  We recommend that the Family and Medical Leave Act (FMLA) leave be designated to run concurrently with a work-related injury if the injury meets the definition of “serious health condition” under the FMLA for 12 weeks in a 12-month period according to your policy and practice.  While the employee’s medical treatments for the work-related injury will be covered under your workers’ compensation insurance plan, that insurance will not cover routine medical issues or family member medical issues.

In designating the leave as an FMLA leave, you will want to provide your employee with information about the employee’s financial share of her current coverage and the method for getting the money to the designated person in your organization in a timely manner to continue coverage.  Under the terms of the FMLA rules, a covered employer is required to maintain group health insurance coverage for an employee on FMLA leave whenever such insurance was provided before the leave was taken and on the same terms as if the employee had continued to work. If applicable, arrangements will need to be made for employees to pay their share of health insurance premiums while on leave. In some instances, the employer may recover premiums it paid to maintain health coverage for an employee who fails to return to work from FMLA leave.

It is important that you provide her with the information about the amounts and timelines and the consequences for not making timely payments (her coverage may be suspended while she is on medical leave).  The employee has a minimum 30-day grace period in which to make premium payments and a 15-day notification period prior to suspending the coverage.

You do have to give COBRA notice to an employee who does not return to work at the end of the FMLA leave if s/he had health care coverage on the day before the FMLA leave began or s/he became covered during leave. However, if the employee had earlier been eligible for health plan coverage but declined to participate, then you do not have to offer COBRA continuation coverage.  COBRA rights apply even if the employee failed to pay the premium co-payments and the group health plan coverage lapsed during FMLA leave. While you can require repayment of health plan premiums you paid on behalf of the employee who fails to return from FMLA leave, COBRA continuation coverage rights cannot be conditioned on the employee first repaying those amounts.

For COBRA purposes, an employee on FMLA leave experiences a qualifying event when the FMLA leave period expires. The last day of FMLA leave will occur on the date the employee informs you that s/he is not returning to work, or the end of the maximum FMLA leave period, whichever is earlier. COBRA is triggered even if the employee chose not to maintain coverage during the FMLA leave.

For more information about FMLA, please refer to the US Department of Labor Family Medical Leave Act Fact Sheet at:  http://www.dol.gov/whd/regs/compliance/whdfs28.htm