Many employers don’t realize that if you terminate health insurance coverage for an employee who has filed a workers’ comp claim, you can be hit with expensive penalties. In fact, even some comp insurers erroneously advise their policyholders that it’s OK to stop the health benefits of employees on workers’ comp so long as the same rules apply to employees whose medical leave is not work-related. But the Workers’ Compensation Appeals Board (WCAB) has ruled that it’s illegal to terminate an injured worker’s health benefits unless you can show a good business reason for doing so. We’ll review the case and offer some suggestions for managing health insurance coverage for workers who have industrial injuries.
Hospital Stops Benefits
Cherie Maraviov went out on workers’ comp after she hurt her back while working as a patient care technician with the Redding Medical Center. The hospital’s policy was to cover workers’ health insurance benefits for the first 12 weeks of any temporary leave. When her 12 weeks were up, Maraviov was told the $619-per-month health insurance premiums were her responsibility. Maraviov filed a complaint with the WCAB claiming that by stopping her health insurance payments, the hospital illegally discriminated against her because she was still on leave for her work injury. The board agreed, explaining that it’s discriminatory to treat an employee injured on the job differently than if the person were working. The board concluded that you can’t cut off an injured worker’s health benefits unless you can justify it with a good business reason. The hospital was ordered to pay Maraviov’s health premiums, plus a 50% increase in her weekly benefits up to a maximum of $10,000 as a penalty.
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Managing Health Coverage
Mary Maloney Roberts, a partner with the Oakland office of the law firm Crosby, Heafey, Roach & May, points out that there is no single clear rule for when you can terminate an injured employee’s health coverage. When you’re faced with this problem, the best approach is to cover these bases:
- Document business necessity. Before you stop paying an injured worker’s health insurance premiums (and offer them COBRA or Cal/ COBRA coverage at their expense), be prepared to show you have good business reasons for doing so. Put together the facts and figures that demonstrate it would be an unreasonable burden for you to continue to pay for health insurance for workers on leave. It may be easier for smaller employers with limited resources to justify terminating health benefits because of cost considerations. Also, your position may be stronger if you have a reasonable belief that an employee who has been off work for a long time and whose coverage has continued won’t be returning.
- Review your policy. The hospital based its policy of continuing benefits for 12 weeks on the fact that employees are allowed 12 weeks of family leave. But the WCAB said it’s illegal to have an arbitrary cut-off date for ending an injured worker’s health benefits.
- Plan for reimbursement. If your workers contribute a share of their health insurance premiums, you can ask them to continue those payments while they’re on leave. If they fail to do so, you will have added justification to stop paying your portion.