Common Compliance Questions- Part 13

November 2011

October 7, 2011
If the employee fails to pay his or her portion of the health insurance premium during FMLA leave and then fails to return from leave, does a qualifying event occur? If it does, does it occur on the last day of FMLA leave?

Under Treasury Regulations Section 54.4980B-10, Q/A-1(a)(1), the relevant consideration for an employee on FMLA leave (or spouse or dependent child of the employee) is whether the employee (or spouse or dependent child) is covered under the group health plan “on the day before the first day of FMLA leave (or becomes covered during the FMLA leave).”

A lapse of coverage during FMLA leave is irrelevant, as provided in Treasury Regulations Section 54.4980B-10, Q/A-3. Although COBRA contemplates a seamless transition from regular plan coverage to continuation coverage, under this special rule a plan may be required to “continue” coverage that already has been lost. Consequently, if the employee declines coverage (or fails to pay the employee portion of the premium for coverage) under the group health plan during FMLA leave and then fails to return from leave, a qualifying event occurs on the last day of FMLA leave.

If you have any questions or comments regarding any of the above information, please do not hesitate to call (708) 717-9638 or e-mail  Common Compliance Questions  Part 13.

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Benefits of BASIC’s FMLA Solutions
• Fair and consistent application of FMLA, meeting Federal and State Legislative requirements for all employees at all locations.

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