Q: I have an employee whom is out on FMLA due to an injury outside of work. If he chooses to decline insurance at open enrollment and then comes back to work later this year, would he be able to re-instate his insurance at that time?

A: Yes. When an employee is on FMLA they do not have to continue their benefits and upon return to work, all benefits must be restored without requalification. (Even if the employee chooses not to retain coverage during leave, the employer is obligated to restore coverage upon reinstatement). Or stated another way, an employee is free to stop their benefits while on FLMA at any time and then have them reinstated upon return.

The “rule” behind this is found here: §825.209   Maintenance of employee benefits.

(e) An employee may choose not to retain group health plan coverage during FMLA leave. However, when an employee returns from leave, the employee is entitled to be reinstated on the same terms as prior to taking the leave, including family or dependent coverages, without any qualifying period, physical examination, exclusion of pre-existing conditions, etc. See §825.212(c).

Q: We are a small employer (35 employees) and are not required to give FMLA leave; however we have elected to do so for our one employee who is due to give birth in the beginning of October. The company does plan to cover our portion of the medical benefits and during the period that she does not draw a paycheck, she will pay her portion of benefits directly to us. When does leave officially start and what the best practice is notify the employee of this start?

A: Let’s start with the basics. An employer who is not subject to FMLA, can provide a leave of absence (LOA). This LOA however, would not be a “protected” leave (e.g. requiring benefits to continue) under the federal FMLA law. Therefore, the first consideration is to check with the insurance carriers. In general, when on an unpaid, unprotected LOA, this is considered zero hours worked. If the plan’s eligibility requirement is 30 hours/week, they would no longer be eligible for benefits and COBRA should be offered due to a reduction in hours. TIP: An employer will want to verify whether their carriers will allow benefits to be maintained for someone on an unprotected LOA.  (If self-funded, check with the stop-loss carrier.)

NOTE: All employers, regardless of size, should have a formal, written LOA policy in their employee handbook. This policy would outline the LOA “rules” (e.g., what qualifies, when it starts, if PTO has to be used first, how long permitted, payment schedule & late payment rules, etc.), which would ensure not only that their employees are aware of their “rights” but also to ensure it is applied on a uniform and consistent basis, to avoid employee relations issues & discrimination claims (an employment law issue).

An employer not subject to FMLA, could follow the guidelines for FMLA (Family and Medical Leave Act Employer Guide), assuming approval is obtained from carriers. Otherwise, again, coverage would terminate and COBRA offered when the employee is no longer working full-time.

Additional Resources:

“The Five Ws, and One H of Health Reimbursement Arrangement (HRAs)” Alera Group, 25 Aug. 2020, aleragroup.com/insights/the-five-ws-and-one-h-of-health-reimbursement-arrangement-hras-082520/.