Employees may find themselves requiring leaves of absence due to medical conditions, family obligations, personal situations, military deployment, and others. During these periods, managing employee benefits to ensure compliance with federal and state laws is a responsibility employers must carefully navigate. Key considerations can help to guide employers in facilitating a legally compliant and efficient worksite leave process.
Employer Action Items
An employer’s worksite leave of absence policies must comply with relevant federal and state laws, while also conforming to the provisions of its underlying health and welfare plans, insurance underlying guidelines, and stop loss requirements Discrepancies between contract provisions and actual administration of a leave policy can lead to horrific consequences, such as retroactive terminations of coverage and retroactive claims reimbursement demands. Therefore, to ensure compliance, employers should regularly review their internal leave policies and cross-verify them with carrier and stop loss contracts.
Summary
Federal Laws:
The Family and Medical Leave Act (“FMLA”) and the Americans with Disabilities Act (“ADA”) are federal laws that can impact an employer’s worksite leave of absence policies. FMLA provides 12-weeks of unpaid, job-protected leave for eligible employees and mandates that, during this leave, employers must continue the employee’s health coverage under the same terms as if they were actively working. This includes continuing employer contributions towards premiums and ensuring the same level of coverage for the employee, and their spouse and dependents.
The ADA does not mandate employers to continue with group health benefits. The ADA does require employers to provide necessary accommodations, possibly including leave or modified work schedules, for employees with disabilities. Employers should engage in an interactive process with the employee to determine appropriate accommodations, including whether and how benefits will be maintained during the leave.
Leave of Absence Policy:
Crafting a comprehensive leave of absence policy is another important factor. This policy should define clear eligibility criteria for various types of worksite leave, define how benefits will be handled during each type of leave, and establish procedures for employees commencing and returning from leave. As mentioned earlier, it is important to ensure the policy is in accord with the terms of underlying contracts and governing plan documents.
Continuation of Benefits:
Employers should also be aware of their plan’s continuation of coverage options because an employee may be eligible for continuation of coverage benefits consistent with the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) or state-level continuation of coverage benefits, if applicable. However, not all leave of absences trigger continuation of coverage rights because generally the underlying reason triggering the right to leave benefits must also result in lapse or termination of participation eligible under the qualifying group health and welfare plan. A leave of absence might trigger continuation of coverage eligibility if that leave results in a reduction of hours resulting in a loss of eligibility Once it is determined that a qualifying event has occurred, COBRA qualifying continuation of coverage must be offered.
Additional Resources
National Conference of State Legislatures – State Family and Medical Leave Laws:
https://www.ncsl.org/labor-and-employment/state-family-and-medical-leave-laws
The Family and Medical Leave Act:
https://www.dol.gov/agencies/whd/fmla
An Employer’s Guide to COBRA:
https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/publications/an-employers-guide-to-group-health-continuation-coverage-under-cobra.pdf
Employer Provided Leave and the ADA:
https://www.eeoc.gov/laws/guidance/employer-provided-leave-and-americans-disabilities-act
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