EMPLOYER OBLIGATIONS TO CONTINUE HEALTH INSURANCE COVERAGE ON UNPAID FMLA LEAVE

Employers are obligated to continue health insurance coverage when employees are on unpaid leave under the Family and Medical Leave Act (FMLA) even if covered under multi-employer plans or through cafeteria plans. Two recent opinion letters from the federal Department of Labor (DOL) reinforce and clarify an employers’ obligations under such circumstances.

In the opinion letter regarding multi-employer plans (Op. Let. No. FMLA2006-2), the DOL ruled (i) an employer must continue to contribute to a multiemployer health plan on behalf of an employee on FMLA leave, or (ii) the plan must provide for maintaining coverage, “such as through pooled contributions by all employers party to the plan,” while the employee is on leave.

In the opinion letter on cafeteria plans (Op. Let. No. FMLA2006-3-A), the DOL cited its regulations in ruling “Employees taking unpaid FMLA leave must have that portion of their cafeteria plan allotment to group health insurance (including dental) premiums paid by the [employer] in the same amount as paid prior to the start of FMLA leave.”

The DOL also pointed out that at the end of the FMLA leave “benefits must be resumed in the same manner and at same levels as provided when the leave began.” Thus, an employer must take steps to ensure that an employee whose life or disability coverage lapses while out on leave because of non-payment must be restored to coverage upon return to work (and not after some waiting period), even if it means continuing payments for such coverage during the FMLA leave.

The FMLA generally applies to employers with 50 or more employees for at least 20 weeks in a year.

Our recommendations:

If you are an FMLA-covered employer, make sure that insurance coverage continues for your FMLA-eligible employees when they are on extended FMLA leave, even when the leave is unpaid and the cost of premiums comes out of your pocket. As these recent opinion letters make clear, this obligation extends to making payments for employees covered under multi-employer plans or cafeteria plans.

Also, if any insurance coverage is not continued when an employee goes on leave under FMLA or Oregon or Washington leave laws, be sure that full coverage can be reinstated upon return from leave status.

If you have any questions about insurance under FMLA or state leave laws, please contact us.

Feel free to share this advisory with others. If you would like to be on our e-mail distribution list, please visit our Email Advisory web page and click on the "Subscribe" button.

Disclaimer: The materials contained in this advisory are for informational purposes only. Nothing in this advisory should be construed as legal advice or opinion. It is important that you consult an experienced attorney concerning your particular factual situation. Do not rely solely on this information.