Q&A: Can an employer cancel an employee’s benefits once FMLA has ended, if the employee does not return to full time active employment?
Can an employer cancel an employee’s benefits once FMLA has ended, if the employee does not return to full time active employment? If yes, does this apply to medical only or would the answer be the same for ALL COBRA-eligible benefits (medical, dental and vision)?
United States Department of Labor (DOL) regulations under the Family & Medical Leave Act (FMLA) at 29 CFR 825.209(f) and as copied below do allow an employer to cease health benefits for an employee who informs the employer that the employee does not intend to return to work, as an exception to the general rule under the FMLA that an employee has the right to equivalent benefits upon return. If the employee in your question is returning on a part-time status (e.g. 20, 25 or possibly 30 hours per week) and such status would be eligible under the terms of your company’s group health plan and/or medical insurance, then you would not be able to cease their coverage and deny them from participating in the group health plan going forward. (Although not explicitly covered in the FMLA regulations or DOL guidance, we believe that other COBRA-eligible benefits such as dental and vision would be subject to the same rules.)
“Except as required by the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) and for key employees (as discussed below), an employer’s obligation to maintain health benefits during leave (and to restore the employee to the same or equivalent employment) under FMLA ceases if and when the employment relationship would have terminated if the employee had not taken FMLA leave (e.g., if the employee’s position is eliminated as part of a nondiscriminatory reduction in force and the employee would not have been transferred to another position); an employee informs the employer of his or her intent not to return from leave (including before starting the leave if the employer is so informed before the leave starts); or the employee fails to return from leave or continues on leave after exhausting his or her FMLA leave entitlement in the 12-month period.”
The employee’s right to “equivalent” benefits upon return from FMLA leave includes all benefits provided or made available to employees by an employer, including group life insurance, health insurance, disability insurance, sick leave, annual leave, educational benefits, and pensions, regardless of whether such benefits are provided by a practice or written policy of an employer through an employee benefit plan. At the end of an employee’s FMLA leave, benefits must be resumed in the same manner and at the same levels as provided when the leave began, plus any changes in benefit levels that may have taken place during the period of FMLA leave affecting the entire workforce, unless otherwise elected by the employee.
An employee cannot be required to requalify for any benefits the employee enjoyed before FMLA leave began (including family or dependent coverage). Accordingly, some employers may find it necessary to modify life insurance and other benefits programs to restore employees to equivalent benefits upon return from FMLA leave, decide for continued payment of costs to maintain such benefits during unpaid FMLA leave, or pay these costs subject to recovery from the employee on return from leave.
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