Help! My employee didn’t pay their share of the health care premium while on FMLA leave
It happens. Every now and then an employee will take unpaid leave under the federal Family and Medical Leave Act (FMLA) for a continuous period and fail to pay their share of the monthly group health plan premium. While employers may eventually terminate the employee’s coverage as a result, they must first take some steps.
The first step is to indicate, in the Eligibility/Rights and Responsibilities notice, who the employee is to contact for setting up payments. Without this information, the employee might not even know they are required to continue making such payments.
30-day grace period
Unless the employer has an established policy providing a longer grace period, its obligations to maintain health insurance coverage cease under FMLA if an employee’s premium payment is more than 30 days late.
15-day notice
In order to drop the coverage for an employee whose premium payment is late, however, the employer must provide written notice to the employee that it did not receive the payment. The employer must mail this notice to the employee at least 15 days before coverage is to cease, advising that coverage will be dropped on a specified date at least 15 days after the date of the letter unless the payment has been received by that date.
Retroactive coverage termination
If the employer has policies regarding other forms of unpaid leave that allow the employer to cease coverage retroactively to the date the unpaid premium payment was due, the employer may drop the employee from coverage retroactively in accordance with those policies, provided the employer sent the 15-day notice.
If the employer doesn’t have such a policy, it may terminate the employee’s coverage at the end of the 30-day grace period, again, if the required 15-day notice is provided.
Premium recovery
In some situations, the employer will maintain the health coverage by paying the employee’s share after the premium payment is missed. If so, the employer may afterward recover the employee’s share of any premium payments it paid on behalf of the employee.
The employer should, however, talk to the insurer, because the employee is entitled to have the coverage reinstated upon return from leave, even if coverage lapsed due to non-payment. Some plans have restrictions on coverage reinstatement. If so, often the employer pays the employee’s share of the premium and recovers them when the employee returns to avoid running afoul of the plan.
Key to remember: Employers may drop group health care coverage for employees on FMLA leave who fail to pay their premiums, but not without first taking some steps.