When an employee takes family or medical leave, unique compensation and benefits management issues come into play. HR and benefits professionals must know how compensation and benefits should be applied to employees who are out on family or medical leave.
In a recent CER webinar, Drew L. Alexis outlined some guidance for employers on the topic of maintaining benefits for employees out on leave.
Maintaining Benefits During Leave: Group Health Plans
“Employers must maintain employee coverage under group health plans. Group health plans are plans that are provided, either directly or indirectly, to the employee by the employer to provide for health care (dental, vision, medical, prescription drug). It also includes any self-insured plans that the employer might offer.” Excluded from the rules on group health plans are those that employees purchase from insurers directly, even if these are advertised at the place of employment.
Since the employer must continue group health plans during an employee’s leave of absence, special consideration must be paid if the plans change during the employee’s leave of absence. The employee on FMLA is entitled to the new or changed benefits or plan just the same as employees not on FMLA. In other words, changes that apply to all employees also apply to employees on FMLA. The employer must provide notice to employee on a leave of absence of any opportunity to change plans or of any right to add plan participants (e.g., new birth, adopted child).
On the other hand, employees have the right to not continue benefit plans like group health insurance during their FMLA leave. If they prefer not to pay premiums, for example, they can cancel it. However, when the employee returns from the leave of absence, the employee must be reinstated to same benefit plans, assuming they are still available to all employees. The employee may not be subject to any new qualifying period, physical examination, exclusion of preexisting conditions, etc.
There are just a few exceptions to the employer’s duty to maintain coverage of group health plans during a leave of absence:
- If the employee is laid off during FMLA (as part of nondiscriminatory reduction in force), employers can discontinue their group health plan coverage. (Consult with counsel when laying off an employee on FMLA leave.)
- If an employee fails to return from FMLA or exhausts FMLA, there’s no duty to continue coverage thereafter.
- If, during the leave, the employee informs the employer of an intent not to return from FMLA, the employer has a right to advise the employee that you are not going to maintain coverage. (Of course, confirm everything in writing before taking this action).
Maintaining Benefits During Leave: Other Benefits
Employee entitlement to other benefits during FMLA leave is based on the employer’s policy for providing such benefits to employees on other forms of leave. The comparison is between paid FMLA and other paid leave, and unpaid FMLA and other unpaid time off.
If the employer pays the employee’s share of premiums during periods of unpaid FMLA leave, at the conclusion of leave the employer is entitled to recover the costs incurred for paying the employee’s share of any premiums whether or not the employee returns to work.
To register for a future webinar, visit CER webinars.
Attorney Drew L. Alexis is Of Counsel with Los Angeles-based Kinaga Law Firm. He represents management in a wide range of employment disputes before federal and state courts and administrative agencies, including in the areas of leave of absence management, discrimination, harassment and retaliation, wrongful termination, and wage & hour claims.