Reduce Benefits and Coverage Levels while on FMLA?

[Guest ebray]

If an employee begins an FMLA leave, can the employee reduce his/her benefits and/or benefits coverage level (but not drop it completely) during the leave?

If yes to #1, when the employee returns to work, are the benefits reinstated at the same type and coverage level that the employee had before the leave or must he/she continue with the "reduced" benefits for the remainder of the plan year?

I know the FMLA has a pretty clear rule with regards to allowing an employee to drop his/her entire benefits package during the leave, but not sure about simply reducing.

Thanks!!

[Sandra Pearce]

Could you give an example of what you mean by reduce the benefit?

[Guest ebray]

An example could be:

An employee is currently enrolled in UHC PPO at the family coverage level and wants to change to the CIGNA HMO at the Family coverage level because it is cheaper

An employee is currently enrolled in the CIGNA HMO at the family coverage level and wants to change his/her coverage level to employee only because it is cheaper...

Thanks!

[Sandra Pearce]

The regulations speak of revoking elections due to leave. I don't see anything that would allow this change unless there was an open enrollment during the leave.

[oriecat]

Actually the election change regs (1.125-4) specifically say that the commencement or end of an unpaid leave of absence is a change of employment status. So if the changes to be made were consistent with the change of status, then it seems to me it should be allowed?

[jsb]

If leave is unpaid, can drop self or dependent due to non-payment of required premium. If individual coverage is fully employer paid, no loss of coverage occurs relative to the employee. I see nothing that would allow a change in plan coverage (eg. PPO to HMO) as this is not consistent with the event and there would not appear to be any special enrollment right that would permit the change.

FMLA requires the employer to continue providing coverage and employer payments during an approved period of FMLA leave, either paid or unpaid. It also requires the employer to return the employee "back as they were" upon return from FMLA leave, if the return occurs within the FMLA period, including adding back any dropped coverage (eg. dependent coverage) as of the day of return.

[Mary C]

FMLA does permit the employer to cancel the employee's coverage if there is an employee cost and the premiums are 30 days behind. The coverage can be canceled back to the date the last payment purchased coverage provided the employer gives the employee a 15 day notice.

[Mary C]

I received an email asking for the cite that would allow employers to cancel medical coverage while an employee is on an unpaid FMLA leave. To do so, the coverage must be contributory for active employees. The guidance can be found in the final rule implementing the Family and Medical Leave Act of 1993 published in the Federal Register in 1995.

"Q&A section 825.212 What are the consequences of an employee's failure to make timely health plan premium payments?

(a)(1) In the absence of an employer policy providing a longer grace period, an employer's obligations to maintain health insurance coverage cease under FMLA if an employee's premium payment is more than 30 days late. In order to drop the coverage for an employee whose premium payment is late, the employer must provide written notice to the employee that the payment has not been received. Such notice must be mailed to the employee at least 15 days before coverage is to cease, advising that coverage will be dropped on a specific date at least 15 days after the date of the letter unless the payment has been received by that date. If the employer has established policies regarding other forms of unpaid leave that provide for the employer to cease coverage retractively to the date the unpaid premium payment was due, the employer may drop the employee from coverage retroactively in accordance with that policy, provided the 15-day notice was given. . . . . . . .

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