Question: We are looking for information regarding medical benefits when someone is out on leave under the FMLA. We understand that the eligible employee’s job is protected while out under the FMLA, and that they are able to make payments on their medical benefits while out on leave. If an employee exhausts all of his 12 weeks of leave, how are the medical benefits handled? Is the company required to allow the employee to continue making the regular salary deduction amount payments, or does the company terminate the employee’s benefits initiating the COBRA notification? What do other companies do in this situation?
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Answer: Thank you for your inquiry regarding continuation of benefits once FMLA leave is exhausted.
Once an employee completes the 12 weeks of Family and Medical Leave Act (FMLA) leave, all rights under that law cease. So, for example, the FMLA’s requirement that an employer provide the same health benefits during an eligible employee’s FMLA leave that it would have provided if the employee worked throughout the leave (see 29 U.S.C. sec. 2614(c)(1)) no longer applies once the FMLA leave is completed.
However, employees who do not return from an FMLA leave also may be entitled to elect COBRA continuation coverage if they were covered under the employer’s health plan on the day before the first day of FMLA leave. See 26 C.F.R. sec. 54.4980B-10 (Q&A-1). The taking of an FMLA leave is not a qualifying event that triggers the right to elect to continue health care coverage under COBRA.
However, if an employee takes FMLA leave and then does not return to work, the qualifying event will occur when the employee informs the employer of his intent to terminate or on the last day of FMLA leave if the employee does not return to work. See 26 C.F.R. sec. 54.4980B-10 (Q&A-2).
An employee is entitled to COBRA coverage regardless of any lapse in health coverage during FMLA leave because he failed to pay the employee portion of the premiums during the FMLA leave, regardless of whether the employee owes the employer unpaid premiums and regardless of any state or local law that provides coverage beyond the FMLA time period. See 26 C.F.R. sec. 54.4980B-10 (Q&A-3 and 4).
Typically, then, when an employee continues on leave after a FMLA-covered leave, and the leave is unpaid, most employers do treat the continuing leave as a qualifying event under COBRA and provide the employee with all of the appropriate COBRA notice and opportunity to continue health insurance coverage at their own expense.