FMLA & Insurance

By Angela Adams, CEBS, SPHR, Director, Human Resource Services
Published May 16, 2017

Question: An employee is out on workers' compensation leave, and we've designated her leave to run concurrently with time she has available under the Family and Medical Leave Act (FMLA). She has not paid her portion of her medical premiums while she's been out, and when we reminded her she still owes her share, she claimed that she "legally" did not have to pay her portion while out on workers' comp/FMLA. Is that true?

Answer: No, that isn't true. As an employer, you are required to continue to offer medical insurance to an employee on FMLA and to pay your portion of the premium, but the employee is still responsible for paying his or her part. Being on workers' compensation does not alter this fact in the state of Illinois; other states may have other practices. 

You have a few choices on what to do, depending on what you have done thus far. First, prior to the leave, did you discuss with the employee how she would be paying her portion of the premiums? Under the FMLA regulations, an employer must provide the employee with advance written notice of the terms and conditions under which these payments must be made. There is a checkbox on the top of Page 2 of the Department of Labor’s sample Notice of Eligibility & Rights and Responsibilities that addresses this requirement. If you established how payment would be made, then follow that process.  

If you did not address payment with the employee in advance, you should look at your past practice. Have you "floated" employees out on FMLA (or other unpaid leave) who haven't paid their premium and worked it out when they returned? If you have, you should follow that practice in this case and allow the employee to pay her portion of the premium upon return. However, you may want to consider changing that practice moving forward (and alerting employees in writing of that change).

If you do not have a past practice of allowing employees to pay when they return, your other choice is to discontinue the employee’s insurance after you have given the appropriate notices as outlined by the U.S. Department of Labor (DOL). Remember that failing to pay insurance premiums is not a COBRA-eligible event, so you should not offer her COBRA. Before you choose this option, we recommend you try to work out a payment plan with her and talk to the lawyer assigned to her case by the workers' compensation carrier, to keep the carrier informed of what is happening with her.

If the employee does return to work, you must reinstate her insurance immediately if she wants it continued, even if she owes you money for her share of the premiums before you discontinued her insurance. If she does owe you money, you should discuss with her how she plans to pay you back, if you have required other employees to reimburse you.

Members may contact the HR Hotline with additional questions by calling 800-448-4584 or emailing hotline@hrsource.org.

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