Employee terminating before end of FMLA. Can employer recoup portion paid for benefits?

[Guest spinky96]

Our company pays for STD for all PT and FT employees. One of our employees received benefits for her FMLA under this plan, but is now terminating her employment before the full FMLA leave has been exhausted. Can we recoup any of the employer paid premiums for her benefits now that she has terminated voluntarily?

[Guest jreddi]

Perhaps. USC29, Chaper 28, Subchapter 1, Section 2614 ©(2) states:

The employer may recover the premium that the employer paid for maintaining coverage for the employee under such group health plan during any period of unpaid leave under section 2612 of this title if—

(A) the employee fails to return from leave under section 2612 of this title after the period of leave to which the employee is entitled has expired; and

(B) the employee fails to return to work for a reason other than—

(i) the continuation, recurrence, or onset of a serious health condition that entitles the employee to leave under subparagraph © or (D) of section 2612 (a)(1) of this title; or

(ii) other circumstances beyond the control of the employee.

John

[mal]

There is also a provision in the regs that

allows an employer to recoup the costs of

health care coverage offered during the

FMLA period.

Practically though, how do you accomplish

this? Many states prohibit unilateral deductions

from paychecks. Also, the cost of suit will

exceed the costs of the benefits.

[Guest spinky96]

I understand the unpaid leave guideline, but there is also a statement in the regs as follows "Because paid leave provided under a plan covering temporary disabilities (including workers' compensation) is not unpaid, recovery of health insurance premiums does not apply to such paid leave.". As our employees receive pay from the disability provider during their FMLA, would I be able to recoup any employer costs?

[GBurns]

Many STD plans have automatic waiver of premium that is effective once benefits are triggered. Have you checked to see if premiums were really paid?

I am also curious as to whether the benefits were taxed/taxable, which they should be if the employer paid the premium or the employee paid on a pre-tax basis through salary reduction.

If the employer did pay premiums (and which are not going to be refunded by the insurance company under a ROP rider or because of WP having been in effect) and the employer then recovers those employer paid premiums from the employee, wouldn't that create a tax scenario that might be difficult to resolve? In that recovering premiums from the employee would make the coverage employee paid and the benefits not taxable BUT the benefits were already taxed either at each benefit payment or already reported on a 1099 for year 2004 by the insurance company. How would you get the insurance company to correct the 1099 or refund any withholdings etc? Trying to adjust on the employee's 1040 would not work effectively unless the employee was willing to lose amount of the taxes paid.

By the way, Where did you find ""Because paid leave provided under a plan covering temporary disabilities (including workers' compensation) is not unpaid, recovery of health insurance premiums does not apply to such paid leave."?

[Guest spinky96]

Sorry, I should have specified which premiums I am wondering about. The premiums I am concerned with are the health and/or dental insurance premiums that the company would have paid for the employee during their leave. In section 825.213, part d, you will find what I have listed above. I am trying to find out if any benefit the employee receives from the disability company will qualify as the paid leave it mentions in that section of the regs.