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California - terminating insurance for non-payment of premiums while on FMLA

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  • California - terminating insurance for non-payment of premiums while on FMLA

    What are the rules regarding the termination of insurance coverage (both employer/employee paid and employee paid only) of an employee who does not pay their portion of the insurance premiums while on FMLA?

    Employee received a letter designating time off as FMLA and in the letter, was providing instructions to pay the employee's part of the insurance premiums. Employee paid three pay days worth of premiums but has not paid for three pay cycles. How long must an FMLA protected employee be kept on insurance plans that are paid for by the employer without employee reimbursement? And at what point can the insurance be terminated after the FMLA time period is over and the employee has not returned to work? Employee has not communicated with employer in over a month and does not appear to intend to return to work.

  • #2
    What Happens if the Employee Doesn't Pay Premiums While on FMLA Leave?

    What happens if an employee fails to pay the employee portion of premiums for coverage under a group health plan during the FMLA leave? Under the FMLA, the employer may require the employee to pay his or her portion of the premium while on leave. Benefits may be terminated if the employee fails to pay their portion of the premium. The FMLA requires a 30-day grace period and 15 days advance written notice.

    IRS regulations (Treas. Reg. – 54.4980B-10) state that loss of coverage due to non-payment of the employee portion of premiums is not a COBRA qualifying event and is disregarded for COBRA purposes.

    However, if an employee does not return to work when FMLA leave ends, experiences a qualifying event because there is a reduction in hours coupled with a loss of coverage. COBRA must then be offered at the end of the FMLA leave - whether or not the employee continued health coverage during that leave.
    Last edited by Betty3; 11-03-2010, 09:41 PM.
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