FMLA & benefits - Questions:

What benefits are employers required to continue when an employee is out on leave under the FMLA? Life and disability insurance?

  1. Does the employee have to pay more than their usual portion of the premium?
  2. What if the employer normally pays the full premium amount when the employee isn’t on leave…must it be consistent whether on leave or not?
  3. What happens for non-payment?

We’ll start with the key tip: during any FMLA leave, an employer must maintain the employee’s coverage under any group health plan during the entire leave period on the same basis as coverage would have been provided if the employee had been continuously employed.

A Group Health Plan is any plan (including a self-insured plan) of, or contributed to by, an employer to provide health care (directly or otherwise) to employees, former employees, or their families. Scroll to the bottom if you want to see what is NOT considered a Group Health Plan.

Let’s review some additional details.

  1. Benefit coverage during FMLA leave for medical care, surgical care, hospital care, dental care, eye care, mental health counseling, substance abuse treatment, etc., must be maintained during leave if provided in an employer’s group health plan.
    1. This rule also applies to benefits provided in a supplement to a group health plan, whether or not provided through a flexible spending account or other component of a cafeteria plan.
  2. If an employer provides a new health plan or benefits, or the health benefits or plans change while an employee is on FMLA leave, the employee is entitled to the new or changed plan/benefits.
  3. Notice of any opportunity to change plans or benefits must also be given to an employee on FMLA leave.
  4. An employee may choose not to retain group health plan coverage during FMLA leave. However, when an employee returns from leave, the employee is entitled to be reinstated on the same terms as prior to taking the leave, including family or dependent coverages, without any qualifying period, physical examination, exclusion of pre-existing conditions, etc.

Does an employer have to maintain health benefits forever? Of course not. Benefits will end if one of the following situations is met:

  • The employment relationship would have terminated if the employee had not taken FMLA leave (e.g., if the employee’s position is eliminated as part of a non-discriminatory reduction in force and the employee would not have been transferred to another position),
  • The employee informs the employer of his or her intent not to return to work,
  • The employee fails to return from leave, or
  • The employee continues on leave after exhausting his or her FMLA leave entitlement in the 12-month period.

Note, there is an exception. Requirements under COBRA must still be met when applicable.

Employee responsibilities:

  • An employee must continue to pay whatever share of group health plan premiums that the employee paid prior to FMLA leave. The employer must provide the employee with written notice of the terms and conditions under which these payments must be made.
  • If premiums are raised or lowered, the employee would be required to pay the new premium rates.
  • Maintenance of health insurance policies which are not a part of the employer’s group health plan are the sole responsibility of the employee.
  • The employee and the insurer should make necessary arrangements for payment of premiums during periods of unpaid FMLA leave. If the employee is substituting accrued paid leave for the unpaid FMLA leave, the employee’s share of premiums must be paid by the method normally used during any paid leave, usually as a payroll deduction.

What if FMLA leave is unpaid?

The employer may require employees to pay their share of premium payments in any of the following ways:

  • Payment would be due at the same time that it would be made if by payroll deduction;
  • Payment would be due on the same schedule as payments are made under COBRA;
  • Payment would be prepaid pursuant to a cafeteria plan at the employee’s option;
  • Existing rules for payment by employees on “leave without pay” may be followed; provided that such rules do not require prepayment of the premiums that will become due during a period of unpaid FMLA leave or payment of higher premiums than if the employee had not taken leave; or
  • Another system voluntarily agreed to by the employer and the employee.

What if an employee doesn’t pay?

An employer can pay the employee’s premiums and recover them when the employee returns to work. If an employee’s premium payment is more than 30 days late, an employer may drop the employee’s health insurance coverage unless the employer has a policy of allowing a longer grace period. An employer must provide written notice to the employee that the payment has not been received, and that his or her insurance coverage will end at a specified date at least 15 days after the date of the written notice unless payment is received by that date. This notice must be mailed to the employee at least 15 days before coverage is to cease. Remember, just because their benefits may lapse, the employee’s leave is still protected under the FMLA, if all other requirements are met.

What if an employee fails to return to work?

An employer may recover its share of health plan premiums paid during the employee’s unpaid FMLA leave if the employee fails to return to work after FMLA leave entitlement exhausts or expires, unless the employee does not return due to:

  • The continuation, recurrence, or onset of a serious health condition of the employee or the employee’s family member, or a serious injury or illness of a covered service member that would otherwise entitle the employee to leave under FMLA; or
  • Other circumstances beyond the employee’s control. Examples provided in the FMLA include:
    • Where a parent stays home with a new child who has a serious health condition,
    • An employee’s spouse is unexpectedly transferred to a job location more than 75 miles from the employee’s worksite,
    • A relative or individual other than a covered family member has a serious health condition, and the employee is needed to provide care,
    • The employee is laid off while on leave, or
    • The employee is a key employee who decides not to return to work upon being notified of the employer’s intention to deny restoration because of substantial and grievous economic injury to its operations.

Circumstances beyond the employee’s control would not include a situation where an employee desires to remain with a parent in a distant city even though the parent no longer requires the employee’s care, or a parent chooses not to remain at home with a well, new child.

Other than the circumstances above, when an employee returns to work, the employer is entitled to recover only the costs incurred for paying the employee’s share of any premiums. When paid leave is substituted for FMLA leave, the employer may not recover its share of health insurance premiums or other non-health benefit premiums for the period covered by paid leave.

But wait, there’s more. An employee’s entitlement to benefits other than group health benefits during a period of FMLA leave (e.g., holiday pay) is determined by the employer’s established policy for providing such benefits when the employee is on other forms of leave (paid or unpaid, as appropriate). In other words, check your policy…how do you handle somebody out on vacation when it comes to holiday pay, etc.? The same rules apply when an employee is on FMLA leave.

For purposes of the FMLA, the term “group health plan” does not include an insurance program providing health coverage under which employees purchase individual policies from insurers, provided that:

  • No contributions are made by the employer;
  • Participation in the program is completely voluntary for employees;
  • The sole functions of the employer with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees, to collect premiums through payroll deductions, and to remit them to the insurer;
  • The employer receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deduction; and
  • The premium charged with respect to such coverage does not increase in the event the employment relationship terminates.

What Guardian is doing

Guardian continuously tracks and analyzes current and pending leave and accommodation legislation to determine potential impacts to our customers.

Learn more about Absence Management
Go now
Read more from the Guardian Absence Management blog
Go now


Information provided on this blog is intended for general educational use. It is not intended to provide legal advice. Guardian does not provide legal services. Consult an attorney for legal advice on this or any other topic. GUARDIAN® is a registered service mark of The Guardian Life Insurance Company of America®

2021-125430 20230831