ABC’s: G is for Group Health Plans

Let’s face it, absence management’s most overused titles or expressions in a presentation or write-up is “The ABC’s of..” or “Alphabet Soup”.  But like any parent who has a 4 year old and can’t believe it when they actually say “There’s no need to cry over spilt milk”, some things work.  So we are continuing on with the ABC’s of FMLA and Leave.

In case you want to get caught up, you can find “F is for Family”, a three part series here. Â

Admittedly, Group Health Insurance is not the sexiest of the FMLA topics. Even though there wasn’t a chapter on this in ‘Fifty Shades of Gray’, it is not as black and white as some employers might hope either.  The simple theme is that the employee is entitled in the same manner as if they had been continuously working.  That is where the simple part ends.

The most complicated part of Group Health Insurance coverage during the FMLA leave is the process of managing it.  The employer portion of any benefit remains the same so just keep doing what you’re doing. If the employee is on paid leave, such as available PTO, the process does not need to change and you can continue with the payroll deduction.  It is when the employee is on an unpaid leave that their contribution gets difficult. This can be a case-by-case basis, dependent on your policy. As we all know, ‘case-by-case’ = ‘customized process’.

Here are the major issues to identify and put a process around.

  • Notice to the employee: Â
    • You must not only tell them what they owe, but when, how, and the consequences of failing to meet these obligations.
    • Additional notifications and changes while the employee is on leave must also be extended to the employee. Â Therefore, if there is a change to the plan or an opportunity to adjust benefits, the employee must be notified and have the same opportunity extended to them, as though they were actively working. Â
  • Receiving monies: Â Will you have the employee pay their portion to you or directly to the insurance carrier? Â If employees have a future absence, how will you enable them to pre-pay premiums to accommodate that future unpaid leave? Â
  • If an employee chooses not to retain group health coverage: Â This can be quite the sticky wicket. Â As the employer, you might think that you will simply terminate coverage and move on. Â The problem comes when the employee returns to work and they are not entitled the exact same coverage as when they left and there can be no qualifying period, physical examination, exclusion of pre-existing conditions. Â
  • An employee absence extends beyond FMLA coverage or the employee provides notice of no intent to return: Â This is likely the simplest of scenarios. Â If the employee is no longer covered under the FMLA or they have provided clear notice that they have no intention of returning to work, then the obligation to provide coverage under the group plan ceases. Â Existing processes should be followed to ensure consistent treatment of all employees.

Some employers simplify their approach by paying the employee portion during any period of unpaid leave, with the intent of recouping that expense upon the employees return. Â Yes, of course there is the risk that the do not return to work and do not reimburse those monies. You need to decide if the energy involved in chasing those funds down or implementing a labor intensive process to obtain the premiums regularly is worth a small fraction of the cases who might not return to work and would choose to skip out on the debt. Â Last year we wrote a piece on how managing to the 1% is likely a bad investment, the same may hold true here as well. Â

One additional component is answering the question ‘What is a group health plan, with regards to this obligation under the FMLA?’  Fortunately, once you answer that one time for your organization, the process may be established and it is not subject to a case by case basis.  The definition of a group health plan is based on the Internal Revenue Code of 1986 at 26 U.S.C. 5000(b)(1). If you are an employer who is large enough to be required to adhere to the FMLA and you provide health coverage for your employees, you are savvy to these qualifications. Â

Although today’s little fire-side chat is wrapping up, this is not a case where we can simply end it all with “And the rest is history”.   If you would like the official language, check out one of the hottest must-reads of the summer, 825.209. A real page-turner, that one!!  If you’re more of a Cliffs notes kind of reader, the U.S. DOL kindly provided Fact Sheet #28A.  That one is worthy of printing off as a poster to go up next to your Rosie the Riveter or Beatles Abbey Road.   Â

We will catch you at the next “ABC’s of Leave” when H is for…… {insert dramatic cliff hanger music here}.  Seriously, you didn’t think I was going to give that one away, did you?!