Benefits Q&A: How Do FMLA Policies & Processes Apply to Benefits?
January 3, 2023
Reworking FMLA policies and processes are never easy. Julie Athey provides clear answers in this month's Benefits Q&A.
Reworking FMLA policies and processes are never easy. Julie Athey provides clear answers in this month's Benefits Q&A.
Our company is reworking its FMLA policy and processes, and I can’t find clear answers to how the law applies to employee benefits. I know we must allow employees to keep their “group health insurance” while on leave by paying the same premiums they would normally pay. But what types of benefits are included in “group health insurance”?
Can employees discontinue benefits if they want and then re-enroll when they return from leave? Can those who keep their benefits in place while on leave continue to pay for them on a pre-tax basis? And how can I make that happen when they are out on unpaid leave without a paycheck from which we can withhold pre-tax premiums?
Great questions! As you know, employees are entitled to continue their “group health coverages” while on FMLA, but must continue to pay their portion of the premiums. That includes medical, dental and vision insurance as well as contributions to a Health FSA. Employers may choose from a number of different methods for collecting such premiums. This includes requiring pre-payment, regular payments during leave, or allowing the employee to pay after returning to work.
The beginning of FMLA leave is considered a “change in status” under the rules that apply to cafeteria plans. This means that employees may elect to discontinue any or all of their health benefits during their leave. While it is unusual for employees to discontinue their group health insurance, they may be more inclined to temporarily terminate dental or vision coverages or FSA contributions.
If you require employees to make payments while out on leave, those payments will not be pre-tax. However, the cafeteria plan rules allow these payments to be made post-tax. As you noted, this option may be desirable during periods of unpaid FMLA leave.
Finally, when employees return from FMLA, they may choose to restart some or all of the benefits they had terminated when the leave began.
On a related note, another tricky question that can arise is when to offer COBRA to employees whose benefits were discontinued during their leave.
