You asked: “If an employee who does not qualify for FMLA takes a leave of absence and does NOT pay her regular share of the insurance premiums, are we allowed to drop her insurance coverage?”
For the employees who don’t qualify for FMLA, yes, you can remove them from benefits if they do not pay their employee-portion of the premium within a reasonable time frame. Under the FMLA, employees taking an unpaid FMLA leave of absence may continue their group health coverage (which includes medical, dental, vision and Health Flexible Spending Accounts) under all the same terms and conditions of active employment.
For example: An employee whose regular plan included enrollment in dental and vision plans would have to remain covered by those plans while on FMLA leave. If that same employee also had a voluntary, employee-pay-all plan, such as Short-term Disability or Long-term Disability, the employer is not required to maintain the employee’s coverage.
For the following group plans/programs, employers must maintain an employee’s coverage for the duration of FMLA leave under the same conditions as if the employee had been continuously employed:
• Medical or health insurance plan
• Dental plan and vision plans
• Prescription drug plan
• Health flexible spending account (HFSA)
• Employee assistance plan (EAP), if it provides medical care
Benefits not subject to FMLA continuation requirements are:
• Group term life insurance and AD&D
• Disability insurance plan
• Dependent care assistance program (DCAP)
• Voluntary employee-pay-all plans
A quick caveat: the Vision and Dental coverage is tricky because the Department of Labor states that employers normally must continue this coverage for employees on FMLA. However, the only exception to this would be when an employer merely acts as a conduit for certain coverage – offering the insurance to employees under payroll deduction as a convenience but not contributing any part of the premium. If you believe your Vision and Dental insurance falls into this “exception category,” then you can discontinue coverage if the employee is not paying the premiums.
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