TOPIC:
Understanding Premium Payment During FMLA Leave
QUESTION:
If an employer is subject to FMLA, what are the employer’s options regarding payment of plan premiums when an employee is on an FMLA guaranteed leave of absence?
ANSWER:
If an employee qualifies for a guaranteed leave of absence pursuant to the Family Medical Leave Act (“FMLA”), the employer may condition continued receipt of benefits upon the employee’s ongoing payment of the employee’s share of underlying premiums associated with such coverage.
Generally, there are three available options for the payment of plan premiums during a guaranteed worksite leave of absence:
- Pre-pay option (lump sum prior to commencement of leave);
- Pay-as-you-go option (timely payment upon the employer’s payroll cycle): or
- Catch-up option (repayment upon recommencement of active service; note: this repayment option must be selected if it is the only option available to non-FMLA employees on a leave of absence).
In the instance of a catch-up option, the employee must be given a reasonable amount of time to restore any premium arrearage upon a return to active service, generally, best practices dictate the remaining balance of the then-current calendar year or six (6) months (whichever is greater), following the employee’s return to active service.
ACTION:
Employers should verify that plan documents and plan-level administration are consistent regarding premium payments required from employees exercising an FMLA-guaranteed leave of absence.
Remember that all eligible employees should be subject to the same premium payment rules during a guaranteed leave of absence.
DETAILS:
For more information, contact the Baldwin Regulatory Compliance Collaborative.
For more information
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