Mar 17, 2022
Making sure your group is compliant with FMLA leave is important. So is making sure that health insurance is paid for.
Question: How can an employee who is out on FMLA leave and not receiving a paycheck pay for their portion of the premium?
Answer: The employee may submit payment for their portion of the premium to the group if a paycheck is not being issued from which to make deductions.
Question: What steps can be taken if an employee on FLMLA leave has not paid their portion of the premium?
Answer: The employer has two options to address this situation.
1. The employee may cancel the employee's coverage.
- The employee must have been given a due date for the premiums and a 30-day grace period to make a payment.
- If a payment is not made on time, the employer must notify the employee in writing that the insurance will be canceled for failure to pay premiums if not received by the specified date. This written notification must be done no less than 15 days before the end of the grace period.
The cancellation does not constitute a qualifying event (26 CFR Part 54.4980B-10) under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Upon return from leave, the employee must be reinstated to the plan as if he or she had never left it.
2. The employee may maintain the employee on the plan instead of canceling coverage for nonpayment of premiums. The employer may recover the premiums when the employee returns to work.
If the employee decides not to return to work after taking FMLA leave, the employer may or may not have recourse to collect premiums from the employee. Additionally, not returning from FMLA leave is a COBRA-qualifying event, and COBRA notification would be sent out at that time.
