Must an employer continue health coverage for employees on leave?
Generally speaking, the continuation of health benefits during an employee's leave is a policy question that is answered by the terms of the plan. But not always. Two federal laws make continuation of health benefits a "must do" under certain circumstances.
The Family and Medical Leave Act of 1993 requires employers to continue coverage under any group health plan for the duration of an employee's FMLA leave. Coverage must remain at the level and under the conditions for which coverage would have been provided if the employee was continuously employed for the duration of the leave.
If the employer requires an employee co-payment for any part of the health insurance premium when the employee is working, it can collect the same co-payment when the employee is on leave. Employers can discontinue health benefits if an employee's premium is more than 30 days late as long as the employee was notified of the impending discontinuance at least 15 days before coverage is set to stop. When deciding whether to cancel the health benefits of an employee on FMLA leave for nonpayment of premium, employers should keep in mind that an employee returning from leave cannot be required to meet any new preexisting condition or waiting requirements.
If an employee is called to military service and his or her orders provide for active duty of 30 days or less, the Uniformed Services Employment and Reemployment Rights Act of 1994 requires that the employer continue health benefits as if the employee remained in employment. The employer would have the same premium obligations for health care coverage as for active employees.
If coverage under a health plan would otherwise end due to military service, both COBRA and USERRA generally allow individuals called for active duty to continue coverage under an employment-based group health plan. Under COBRA, coverage may be continued for up to 18 months; continuation coverage under USERRA is for up to 24 months. And even though a service member's dependents may be eligible for coverage under TRICARE, the military health care system, the employer cannot terminate continuation of health plan coverage.