Question: I have an employee who has been off work with a workers compensation injury for over 6 months. What is my obligation to continue to keep this employee on the company health insurance plan?
Answer: It depends on a few things. The employee’s entitlement to continuation of health insurance benefits depends primarily (1) whether the employee qualifies for leave under the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA), and (2) the terms of the employer’s summary plan description for health insurance.
An employee may qualify for leave under the FMLA or the CFRA if the employee needs time off for a serious medical condition and has worked 1,250 hours in the prior 12-month period. This 12 weeks may run concurrently with an employee’s workers’ compensation leave. If an employee qualifies for leave under the FMLA or the CFRA, the employer should designate the first 12 weeks of the employee’s leave as FMLA and/or CFRA. Employees who are on FMLA or CFRA leave are entitled to continuation of health insurance benefits. During this time, the employer must continue the health insurance benefits on the same terms and conditions as if the employee continued to work. For example, if the employer normally covers 50% of the employee’s premiums, the employer needs to continue to cover that same portion. Employers must comply with these rules during the entire 12-week period.
Sometimes, an employee is off work for more than 12 weeks. Once the employee exhausts the 12 weeks of FMLA or CFRA, the employer must engage in the interactive process with the employee to determine if additional leave is required a reasonable accommodation. In these situations, the employer’s health insurance plan document will determine how long the employee may remain eligible for health insurance benefits. Even if the employee remains “eligible” for health insurance benefits, the employer has more flexibility with the terms and conditions of the benefits. For example, if the employer normally covers 50% of the employee’s premiums, the employer may require the employee to pay the entire premium after the initial 12 weeks are exhausted. Employers who are considering such changes should treat similar situations similarly to avoid possible discrimination claims. Employers should also be aware that certain types of leave (e.g. pregnancy-related leave) may increase an employee’s right to continuation of health benefits beyond 12-weeks.
Employers may contact their broker or review the plan document to determine when an employee becomes ineligible for coverage. Many policies state that after three or four months of medical leave, the employee becomes ineligible to participate in the plan as an active employee. At that time, unless the employee is on protected pregnancy disability leave or CFRA baby bonding leave, the employee’s company health insurance coverage would cease, and the employee would be offered health insurance continuation at the employee’s expense through the Consolidated Omnibus Budget Reconciliation Act (COBRA). The employee’s reduction in hours is a qualifying event under COBRA, and your health insurance broker or plan administrator can help you discontinue coverage for the employee and timely offer continued coverage under COBRA.
Employers sometimes believe that employees who are on workers’ compensation leave are entitled to health benefits indefinitely, but that is not the case. For more information on family and medical leaves, and pregnancy disability leave, visit https://calcivilrights.ca.gov/family-medical-pregnancy-leave/.