Question: How long are employers required to continue paying medical premiums for employees who are on an unpaid medical leave of absence?
Answer: Not as long as many employers may think. Outside of a couple of legally regulated leaves and collective bargaining agreements, there are few restrictions. Whether by omission or commission, you may be paying thousands of unnecessary dollars for medical premiums. Worse yet, we often see employers continuing payment of medical premiums for employees who are out of work on a workers’ compensation injury for several months, but not at all for an employee out for a non-work injury or pregnancy. That’s a problem.
Employers not covered by the federal Family and Medical Leave Act (FMLA) or the state equivalent CA Family Rights Act (CFRA) (typically those with fewer than 50 employees) have no requirements to continue to contribute toward medical coverage while an employee is on a medical leave of absence. However, it is important that the employer be consistent in continuing payments for employees on a medical leave. The laws are specific that pregnancy related disabilities must be treated the same as any other non-pregnancy type disability leave.
If your organization is covered by the FMLA or CFRA then you must continue to pay the employer’s portion of the employee’s medical premium for up to 12 weeks. (Remember that a workers’ compensation injury, pregnancy disability, or caring for an ill family member may also fall under the FMLA/CFRA requirements.) Once that time has expired and if the employee has not returned to work, then the employer may offer the employee the option of continuing medical coverage under COBRA. COBRA premiums are paid fully by the employee. Some employers choose to pay the premiums for a longer period because of past practice, generosity, or even guilt. There are no legal requirements that the employer’s portion of the group medical premiums be paid after the FMLA/CFRA required 12 weeks.
Many of our non-FMLA clients are beginning to move to a policy of offering medical premium contributions for the first month of the unpaid leave only. The subsequent offer is “move to COBRA or lose medical coverage” after the end of the first month of leave. It is not necessary to continue this premium contribution because the injury or illness is based on a work related issue or pregnancy. Remember, if the employee is covered under FMLA or CFRA it is essential that the employer’s portion of the medical premiums be paid for up to 12 weeks regardless of how other leaves may be covered.
Personal leaves of absence (that trip to Tahiti for 4 months) may be treated differently than medical leaves for duration as well as other benefit coverage.
If you choose to change your policy or practice about medical premium contributions feel free to call us. The beginning of the year is a perfect time to announce changes in past practice.