Benefits Q&A: FMLA For Inactive Employees

Question:

An employee of ours exhausted his FMLA leave in mid-November and is not expected to return to work until at least March 2021. We have approved him for additional unpaid leave as an accommodation of a disability. Under the terms of our health plan, the employee’s last day of eligibility for coverage was November 30. We have offered him COBRA for health coverage and terminated non-health benefits due to loss of eligibility.

According to our FMLA policy, the employee is eligible for an additional 12 weeks of FMLA as of January 1 (because we use the calendar year as our FMLA leave year). Does his renewed eligibility for FMLA allow him to hop back onto the company’s benefits as an active employee at that time, even though he hasn’t actually returned to work?

Answer:

This is a very complicated issue that may depend on several different factors. These include whether you are fully- or self-insured, the terms of your benefits plans, and carrier policies (for fully-insured plans). Another factor is the terms of your internal leave policies.

For fully-insured benefits, the carrier’s position on eligibility for benefits during a period of non-FMLA leave would be controlling. Many carriers allow employees to maintain their benefits while on an approved medical leave of absence. Depending on the carrier’s approach, a fully-insured employer may not need to terminate an employee’s benefits at the end of FMLA leave in the first place.

For self-insured plans, employee eligibility for benefits during a non-FMLA leave should be addressed in the medical plan document and/or wrap document. There are a variety of ways to handle this, but it sounds like your plan does not allow employees to keep their benefits once FMLA has ended.

As for your ultimate question – can he enroll for benefits beginning January 1 – I would recommend allowing the employee to re-enroll in health coverage as of the first day he requalifies for FMLA. To make sure you don’t have any problems with the carriers denying claims, I would take the following steps:

• Make sure your FMLA policy clearly states you use the calendar year as your FMLA leave year;
• Confirm that the employee still meets eligibility requirements for FMLA leave as of January 1, 2021; and
• If necessary, require the employee to obtain an updated medical certification from his health care provider.

As for benefits other than health coverage, it’s not possible to tell from the information provided whether the employee will be eligible to enroll as of January 1 or have to wait until he returns to work. Feel free to contact me if you would like to work through those issues.