Paid FMLA Leave-but not whole pay

[Guest TXCafe]

I am a Cafeteria Plan Administrator at a TPA. One of my clients has a generous leave policy that allows their employees to take FMLA leave at whatever increments they need. Several take one or two days at a time on a regular basis. They may be paid by sick pay or vacation pay while on leave and if they use that up, they're still paid 70% pay up to 12 weeks. They never have unpaid leave basically. This is a large company and we try to do everything very uniformally because the participants will fight if they know something was done for one participant and not another....the whole discrimanatory administration issue is avoided that way too.

Recently one of their participants went on disability leave which the employer is still classifying as FMLA leave but he is being paid 70% of his usual pay. He wanted to drop all of his elections under the Cafeteria plan. This Cafeteria Plan only consists of Medical FSA, DCAP, and an individual insurance premium reimbursement account (I realize this is an ongoing controversial issue on this board but let's leave that one alone in this case). The employer does not want to let him drop his elections because they feel that then they would have to let the participants taking one or two days to drop their elections and this would cause an adminstrative nightmare for everyone.

I have not been able to find any guidance on partially paid leave. I have found that they have to allow them if its unpaid leave and they can refuse to allow them to drop if its paid leave. I recommended to the client that we ammend the PD to include language about paid leave being ineligible to make an election change and at what percentage (i.e. 50% or above=paid, less than 50%=unpaid).

Does anyone know any guidance on this or have any opinions about how to handle this? Your feedback would be GREATLY appreciated!

[LRDG]

There is no IRS requirement that I'm aware of requiring extended FMLA leave be treated the same as the one-two day FMLA leave. The issue should be addressed in the plan document. If it's not already addressed in the PD, it's probably a good time to issue an amendment.