Cancel Benefits during FMLA

[Guest dackerma]

Can an employer cancel benefits when an employee on FMLA does not pay the required employee contributions? We have an employee who has not paid their employee contributions for well over a month. They were sent a letter and payment coupons with the due dates listed on the coupon. The payment coupon also indicates that if payment is not received by the end of the month in which it is due that coverage will be terminated.

[LRDG]

I'm not familiar with your plan document or terms of your plan or options offered to this participant with respect to continuing or interupting participation during FMLA.

Circumstances that typically trigger if MFSA participation continues or is interrupted is if FMLA is paid or unpaid. If FMLA is paid, MFSA deductions should continue uninterrupted.

If FMLA is unpaid, and the participant is unable to continue funding without income, MFSA participation is interrupted for the period of the unpaid FMLA leave. Upon return to work, catch up the missed deductions, for instance if 10 weekly $10 payroll deductions were missed, allow the participant to withhold $100 as a one time lump sum payroll deduction, resuming the remaining regular deduction.

Another option is to calculate the remaining balance to be funded for the remainder of the year and withhold a new per pay period amount. For example if the annual elected amount was $2000, with $1000 funded prior to leave, upon returning frm FMLA the remaining $1000 deducted over 10 remaining pay periods for $100 deduction per pay period. Both options will provide the tax savings MFSA participation is based upon and should have no baring on MFSA expenses with service dates during FMLA period, that are eligible to be claimed upon return to work when participation resumes.

If neither of the 'catch-up' options is feasible, allow a personal check to fund the remainder of the MFSA funding for the missed deductions. This will allow participant to avoid forfeiture if there was an available balance during the FMLA leave.

The participant will not realize the payroll tax savings for those contributions if a personal check is used to fund the MFSA.

There are some issues that haven't presented themselves in my experience with respect to unpaid FMLA and interupted MFSA participation. One involves unpaid FMLA with interupted participation, claims should be honored for service dates prior to interupted participation and unpaid leave, to maintain compliance. Similar to rules governing MFSA claims up to elected amount for participants terminating employment.

The plan is not obligated to continue paying claims when a participant is no longer making contributions, however without more details I can't respond to your specific question.

[david rigby]

Consider the possibility that non-payment of premiums is the employee's way of saying, "I'm gone" ?

[LRDG]

That's stating the obvious, don't you think? Because we all know this individual would never consider legal action against the ER for non-compliance, given the chance.

[Guest dackerma]

This employee is/was being paid short term disability by a third party, therefore we are not able to collect her contributions for medical, dental , vision, and flex spending coverages. She had made no attempt to pay even a portion of what she owed for those coverages. We thought that since the FMLA rights and responsibilites says " the employer must maintain the employee's health coverage under any group health plan on the same terms as if the employee had continued to work", that she must pay her contributions as that is the terms under which active employees maintain their coverage. If we don't receive payment, do we have to wait until the 12 weeks are exhausted to cancel her coverages?

[GMK]

For what it's worth (consider the source):

Typically, the notice given to the person going on FMLA says that if the employee's share of the premium is not paid, then the coverage ceases. At that point, the person has to pay their own medical bills.

Your plan may allow for premium payments to be made up and coverage restored, even retroactively back to the date it was discontinued. In that case, the person can file for reimbursement of the medical payments she/he paid while coverage was discontinued.

FMLA does not require you to continue coverage if the person does not make required premium payments. When the employee returns to work, however, FMLA does require you to return the person to the coverage she/he had before going on FMLA leave. I suggest that you talk to the insurer about what you may need to do to ensure that coverage will be restored after the FMLA leave in cases where the employee does not pay for coverage during the leave.

When the employee returns to work, the company is allowed to try to get the employee to pay back any of the employee's premiums that the company paid during the leave, but I have no experience with this.