From: Benefits
From the facts presented, this employee has been on short-term disability and federal Family and Medical Leave Act (FMLA) leave and is now applying for long-term disability based upon her inability to return to work. The employer does not have a specific policy regarding payment of health premiums, except for the condition that the employee pays a percentage of the cost of the medical premium while out on disability. There has been no past precedent set in the handling of other leaves. The employee in question has not paid any health care premiums to date.
1. Continuing medical insurance on extended leaves. Under FMLA rules, an employer is obligated to continue medical insurance while the employee is on an approved FMLA leave for up to 12 weeks as long as the employee continues to pay his/her share of the premiums and/or makes arrangements with the employer for those premium payments.
So unless the employer plan provides for more generous coverage of employer-subsidized medical insurance under the short-term disability or long-term disability plans, the employer must provide the coverage for up to 12 weeks. After that period of time, the employee may be entitled to health care continuation coverage under COBRA (Consolidated Omnibus Budget Reconciliation Act) where the employee may continue health coverage at full cost plus an administrative surcharge. In this particular situation, although the FMLA leave does not require employers to continue health insurance unless the employee pays his/her share of the premiums to remain covered, there is the employer obligation to provide the employee with notice of this requirement and to make arrangements for the premium payment during any unpaid portion of the leave.
2. Recovery of health insurance costs made on the employee’s behalf. An employer may recover the cost of group health insurance premium payments made during any unpaid part of a FMLA leave if the employee: (a) fails to return from leave when the leave entitlement expires; or (b) returns from leave but fails to work 30 calendar days after returning. However, if the reason for the failure to return is either beyond the control of the employee or because of a serious health condition starting, continuing, or recurring, the employer cannot recover its costs. In this particular situation, this would appear to be the case. So while it would appear that the employer would not be able to recover health insurance payments made on the employee’s behalf, the employer may be able to terminate coverage at the end of the FMLA leave and offer COBRA unless there are specific provisions made to continue coverage under the employer’s STD or LTD plans.
