Q: If your employee takes time off under the Family Medical Leave Act and wants to maintain health coverage while he or she is out, what is the best way to accommodate this request?
A: There’s more than one correct answer – but COBRA isn’t one of them.
COBRA Qualifying Events
Under certain circumstances, employees, their spouse and dependents may be eligible for a continuation of health plan coverage under COBRA. Multiple events can trigger COBRA continuation coverage. According to the Department of Labor, qualifying events include the following:
- Termination or reduction in employment hours resulting in loss of coverage
- Employee enrollment in Medicare, resulting in loss of coverage for a spouse or dependents
- Divorce or legal separation, resulting in loss of coverage for a spouse or dependents
- Death of the employee, resulting in loss of coverage for a spouse or dependents
- Loss of “dependent child” status, resulting in loss of coverage for the dependent
See what’s not mentioned? FMLA. And for good reason. Going on FMLA leave is not considered a qualifying event under COBRA.
Under the Family and Medical Leave Act (FMLA), eligible employees can take up to twelve weeks off during a twelve-month period in order to care for a new child, to care for a close family member with a serious health condition, or to deal with a serious health condition that renders the employee unable to work. Time can also be taken off for certain situations involving a close family member who is serving in the military on active duty, and twenty-six weeks can be taken off to care for a close relative who is a servicemember.
The FMLA protects the rights of eligible workers who need to take time off for qualifying events. Because of this law, employers cannot fire or retaliate against employees who take FMLA leave. Additionally, the employer must maintain group health benefits during leave.
However, the law does not guarantee pay. Although some employers might offer paid time off that can be used during FMLA leave, this is not a legal requirement, and many employers are unpaid during all or part of their leave.
FMLA and Benefits
If employees pay for their premiums through payroll deductions, and if these employees are no longer receiving a paycheck while on FMLA, how is premium payment for benefits to be handled?
- COBRA is not the solution. As we’ve seen, FLMA leave is not a qualifying event for COBRA.
- Discontinuation of coverage is not an option, either. Under the FMLA, group health benefits must continue during leave. Employers will continue to pay their portion of coverage costs, and employees will continue to pay theirs.
Because payroll deduction may no longer be an option, employers sometimes need to find another way to collect premium payments during FMLA. This can be done using the normal payment schedule – for example, the employee might send a check every two weeks, when payroll deductions would normally occur – or using another arrangement.
According to the Department of Labor’s Employer Guide, the employer must provide advance written notice regarding how payments will be made. If the premium payment is more than 30 days late, coverage may be canceled.
If you have Travisoft COBRA administration software, which automatically comes with Retiree and Direct Billing functionality, you could use your Direct Billing capability to manage this scenario. Not using the Retiree and Direct Billing functionality yet? Contact us to learn how to get started.