FMLA Job Protection and Benefits Maintenance

During FMLA leave, an employer must keep the employee's group health plan coverage in place on the same terms as if the employee had continued working, and the employee remains responsible for their usual share of the premium. On return, the employee is entitled to the same or an equivalent job and to have benefits restored without having to requalify. Benefits other than group health coverage follow the employer's rules for other types of leave.

The restoration rules themselves are covered in the right to the same or equivalent job under FMLA and exceptions to FMLA job restoration rights. This post focuses on the benefits side of job protection.

Group Health Coverage: Same Terms as if Working

"Same terms" means the employer continues its contribution at the level it would have paid, the employee keeps the same coverage options, and plan changes that apply to everyone (a premium increase, a new carrier, a new plan option) apply to the employee on leave too. An employee on leave should receive the same notice of plan changes and enrollment opportunities that active employees receive.

The obligation lasts for the duration of FMLA leave. It ends earlier if the employee clearly states they will not return, or if the employee's premium share is more than 30 days late under the rule below.

Collecting the Employee's Share

When leave is paid (for example, substituted PTO), the employee's share is usually taken the normal way, through payroll deduction. When leave is unpaid, the employer can require payment by any method it uses for other unpaid leave, such as:

• paying at the same time the payment would be made by payroll deduction;
• paying at the same time as COBRA premiums would be paid;
• prepaying through a cafeteria plan, at the employee's option;
• following the employer's existing rules for payment during other unpaid leave, provided those rules do not require prepayment before leave begins or higher premiums than if the employee had kept working; or
• another arrangement that the employer and employee voluntarily agree on.

The employer must give the employee advance written notice of the terms and conditions for paying. It cannot impose stricter terms on FMLA leave than on other unpaid leave. How payroll codes and records these payments is covered in payroll recordkeeping for the FMLA.

When the Employee's Payment Is Late

Unless the employer has a more generous policy, it may stop maintaining coverage if the employee's premium payment is more than 30 days late. Before coverage ends, the employer must send written notice at least 15 days in advance that coverage will cease on a specified date if payment has not been received.

Two practical points:

• Dropping coverage does not remove the obligation to restore the employee's coverage on return, on the same terms and without a waiting period, preexisting condition requirement or physical exam.
• Many employers choose to keep coverage in force and pay the employee's share themselves, then recover it through payroll deductions after the employee returns. That avoids a gap at reinstatement. The recovery arrangement should be documented in writing before the leave, and deductions checked against state wage laws.

Recovering the Employer's Premiums if the Employee Does Not Return

If the employee does not return after unpaid FMLA leave, the employer may generally recover the premiums it paid to maintain health coverage. It cannot recover them when the failure to return is due to the continuation, recurrence or onset of a serious health condition (of the employee or a family member, or of a covered servicemember in the case of military caregiver leave) or other circumstances beyond the employee's control. The employer may require certification of the health condition. An employee who returns to work for at least 30 calendar days is treated as having returned.

When the employee does not return, COBRA rights may begin; see when COBRA is triggered during employee leave and employer requirements under COBRA. FMLA leave itself is not a COBRA qualifying event.

Benefits Other Than Group Health

For life insurance, disability coverage, retirement plans, vacation accrual and seniority, the FMLA does not require continued accrual during unpaid leave. The rules are:

• No loss of what was earned before leave. Leave cannot cause the loss of any benefit accrued before it began.
• Accrual during unpaid leave follows the employer's policy for other unpaid leave. If other unpaid leave accrues seniority or PTO, FMLA leave must too.
• Keeping other coverage in force. An employer that keeps life or disability coverage active during unpaid leave, so the employee can be restored to it, may recover the employee's share of those premiums.
• Attendance-based bonuses. A bonus that requires perfect attendance may be withheld for FMLA leave only if it is also withheld for comparable non-FMLA leave.

Restoration of Benefits on Return

On return, the employee must be restored to benefits at the same level as before leave, including plan changes that took effect for everyone during the leave, without requalifying. A retirement plan's service and participation rules should be checked so that the leave period is treated consistently with other unpaid leave.

Medical Information

Benefits conversations during leave often touch on health information. Keep FMLA medical certifications in confidential files separate from personnel files, and share with benefits and payroll staff only what they need, such as dates and designations. The HR-wide tracking steps are in tips for tracking and managing FMLA leave.

Frequently Asked Questions

Does the employee still pay their share during FMLA leave?

Yes. The employee remains responsible for the same share of the premium they paid while working, unless the employer chooses to cover it.

How late can a premium payment be before coverage stops?

The employer may drop coverage if payment is more than 30 days late, after giving at least 15 days' written notice.

Does vacation or PTO accrue during unpaid FMLA leave?

Only if it accrues during the employer's other comparable unpaid leave. The FMLA does not require it on its own.

Can we recover premiums if the employee resigns at the end of leave?

Generally yes for unpaid leave, unless the reason is a continuing or new serious health condition or another circumstance beyond the employee's control.

Is FMLA leave a COBRA qualifying event?

No. COBRA rights can arise when the employee does not return or employment ends.

Related Reading and Training

The FMLA training and certification program covers benefits maintenance and premium recovery in detail, and the Integrating FMLA, ADA, COBRA and Workers' Compensation program covers the COBRA handoff when leave ends.