Employer Obligation to Maintain Health Coverage When Employees Take FMLA Leave

Employer Obligation to Maintain Health Coverage When Employees Take FMLA Leave

For employers subject to the Federal Medical Leave Act (FMLA), it is important to understand what obligations they have when employees take protected leave.1  Generally, FMLA requires covered employers to provide eligible employees with 12 workweeks of unpaid, job-protected leave (26 workweeks for military caregiver leave), maintain their group health benefits under the same terms and conditions that would have otherwise applied and restore their group benefits upon return from leave. Employers also have certain FMLA notice requirements that set forth the obligations each party has under the law.

The devil is always in the details, though, and employers often face compliance challenges related to maintenance and payment of premiums for group health plan benefits during an employee’s FMLA protected leave. The following questions and answers are intended to address these compliance issues and provide an overview of the general requirements related to maintaining group health plan coverage during FMLA protected leave. 2

  1. What group health coverage is an employer required to provide to an eligible employee on protected leave?
    An employer must provide the same group health benefits to an employee taking protected FMLA leave under the same conditions that would have otherwise been provided if the employee had been continuously employed. For example, if an eligible employee elected family coverage under the employer’s medical, dental and vision plans prior to taking protected leave, then family member coverage must be maintained during the FMLA leave.
  2. Is an employer required to continue paying his share of the premiums for health coverage for an employee taking FMLA leave?
    Yes, the employer must pay the same share of the premiums for health coverage as it would have paid if the employee had not been on leave. In other words, among other requirements, the employer cannot require an employee on FMLA leave to pay more for coverage than what the employee would have paid if he or she had remained actively employed. However, in certain circumstances discussed in Question No. 5, the employer’s obligation to maintain coverage will end early.
  3. When FMLA leave is unpaid, what options does an employer have for obtaining payment of the employee share of the premium during the period of protected leave?
    If the employee’s share of premiums is normally paid on a pre-tax basis through a cafeteria plan, an employer may offer the following payment options to employees on FMLA leave:

    • Prepay option: The employee is given the opportunity to pay, before commencing FMLA leave, the contributions that will be due during the leave period. If offered, it cannot be the sole option to employees for paying their share of the health premiums while on FMLA leave. This option works best when the employee can plan for the leave in advance.
    • Pay-as-you-go option: The employee pays his or her share of the cost of coverage in installments during the leave. The contributions could be paid with after-tax dollars or with pre-tax dollars to the extent that the employee receives compensation (e.g., unused sick or vacation days) during the leave.
    • Catch-up option: The employer and employee agree in advance that the employer will advance payment of the employee’s share of the group health premium during the leave and the employee will pay the advanced amounts with catch-up salary reduction contributions upon return from leave. This catch-up option may the sole option offered to employees on FMLA leave only if it is the sole option offered under other types of unpaid leave. This option may not work well when the leave is expected to be of long (or indefinite) duration.Employers should ensure that the payment options they offer to employees taking FMLA leave are permitted under their cafeteria plan documents and that the payment options offered to employees on non-FMLA leave are also offered to employees on FMLA leave.Finally, certain plan designs, such as flex credits, health flexible spending accounts (FSAs) and health savings accounts (HSAs) can present cafeteria plan administration issues when employees take protected FMLA leave. Employers should work with a trusted broker or third-party service provider familiar with its plan design to ensure compliance with all Department of Labor FMLA rules and related guidance.
  4. If an employer begins offering a new health plan or makes changes to its group health benefits while an employee is on FMLA leave, is it required to make any such benefit changes available to an employee on FMLA leave?
    Yes, the employee on FMLA leave is entitled to the new or changed plans / benefits to the same extent as if the employee were not on leave. Further, the employer must provide notice of an opportunity to change health plans or benefits to the employee on FMLA leave.
  5. When does an employer’s obligation to maintain coverage for an employee taking protected FMLA leave end?
    An employer is not required to maintain group health plan coverage for employees taking protected leave in the following situations:

    • The employee chooses to drop coverage during the leave;
    • The employee fails to pay his or her share (if any) of the premium for coverage by the applicable deadline (including the required grace period); or
    • The employee does not return to work at the end of the leave or informs the employer that he or she does not intend to return from the leave.
  6. What are the consequences for an employer who fails to maintain group health benefits of an eligible employee during protected FMLA leave?
    Employers who fail to meet their obligations under FMLA can be subject to suit for corrective action and damages by the Department of Labor (DOL) or an eligible employee.
  7. Where can I obtain more information regarding my obligations as an employer during FMLA leave?The Wage and Hour Division of the DOL offers an array of compliance resources helpful to employers who want more information on their obligations under FMLA. Its FMLA Employer Guide provides a detailed review of FMLA employer obligations, including addressing notice requirements, intermittent or reduced scheduled leaves, the certification process, military leave, recordkeeping requirements and interaction of FMLA with other state and federal laws.Employers can also find additional information on the Wage and Hour Division’s FMLA webpage, including forms, posters, fact sheets, regulations, and interpretive guidance.The FMLA Employer Guide is available here: https://www.dol.gov/whd/fmla/employerguide.pdf

    The FMLA Webpage is available here: https://www.dol.gov/whd/fmla/


[1] FMLA applies to private-sector employers with 50 or more employees for each working day in 20 or more workweeks in the current or preceding calendar year. It also applies, regardless of the number of employees, to all public agencies (federal, state, and local governments) and local educational agencies (including public school boards, and public as well as private elementary and secondary schools).

[2] Employers can have additional obligations to employees taking certain forms of leave based on their internal policies or state laws, which are outside the scope of this article. Employers should work closely with employment counsel to understand any other obligations they may have, in addition to those required by FMLA.

— Elizabeth Raggio, JD  /  Elizabeth@

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