Key benefit considerations during FMLA leave
One of the cornerstones of the federal Family and Medical Leave Act (FMLA) is that while employees are on leave, the employer must continue employees’ coverage under any group health plan. It must be the same conditions as coverage would have been provided if the employee had not taken leave.
This requirement, however, is limited only to group health care coverage.
Group health care coverage defined
Group health care coverage is defined for purposes of the FMLA, by the Internal Revenue Code as the following:
A plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or their families.
Such group plans could include medical, surgical, hospital, dental, and eye care, as well as, mental health counseling, substance abuse treatment, and so on. When it comes to benefits such as separate plans for dental and/or eye care, these plans would also be considered group health plans and would need to be maintained during FMLA leave.
Plans may be excluded if they meet certain criteria:
- The employer makes no contribution to the plan;
- Participation in the program by employees is completely voluntary;
- The sole functions of the employer with regard to the plan are, without endorsing the plan, to permit the insurer to publicize the plan to employees, to collect premiums paid by the employees through payroll deduction, and to remit these premiums to the insurer;
- The employer receives no consideration in cash or otherwise in connection with the plan, other than reasonable compensation for administrative services; and
- The premium charged to the employee does not increase in the event the employment relationship ends.
Under some circumstances, employers may elect to maintain other benefits, such as life insurance or disability insurance, by paying the employee’s share of premiums during periods of unpaid FMLA leave.
This could be the case when, for example, the employer can ensure that it can meet its responsibilities to provide equivalent benefits to the employee upon return from unpaid leave. In such situations, premiums need to be paid continuously to avoid a lapse of coverage. At the end of leave, the employer is entitled to recover only the costs incurred for paying the employee’s share of any premiums whether or not the employee returns to work.
An employee’s entitlement to benefits other than group health care coverage, such as holiday pay, during a period of FMLA leave is determined by the employer’s established policy for providing such benefits when an employee is on other forms of leave.
Key to remember: The FMLA requires employers to continue group health care coverage during FMLA leave, but policies other than group health care plans might also require some consideration regarding premium payments during unpaid leave.