An employee leave of absence can happen unexpectedly, but employers retain responsibilities to comply with state and federal regulations governing the employee’s rights to continued healthcare. Regardless of whether the employee takes a leave of absence for a family obligation, medical emergency, military deployment, or another circumstance, employers must know their obligations to maintain a compliant leave process in their organization.
Understanding these laws and regulations is essential for employers to remain in federal compliance and to avoid liabilities during an employee leave of absence.
How to Identify Employer Obligations
Employers must fulfill numerous obligations to state and federal laws during an employee leave of absence. Additionally, the existing health and welfare plans and insurance policies of the impacted employee must be fulfilled while keeping track of the out-of-pocket expenses cap denoted by the business’s stop-loss insurance, if applicable.
These limits define an employer’s contractual obligations during an employee’s leave of absence, which must be administered based on predetermined coverage limits and legal requirements. Failure to fulfill these obligations can lead to disastrous consequences for the employer, such as retroactive coverage termination or claim reimbursement denial.
Top-performing employers regularly review relevant state and federal regulations, internal leave policies, and continuation of coverage options to verify the correct course of action during an employee’s leave of absence. Confirmation with the carrier ensures all participants have the same understanding.
Legal Regulations
During an employee’s leave of absence, they are protected by specific federal laws, including:
- Family and Medical Leave Act (FMLA)
- Americans with Disabilities Act (ADA)
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
The FMLA requires employers to provide eligible employees with 12 weeks of job-protected leave. The leave is unpaid but retains the worker’s corporate health policy with the same coverage as during their active work schedule. This includes but is not limited to maintaining their coverage terms, continuing to cover their dependents and spouses, and requiring employers to continue contributing to their premiums.
The ADA requires employers to provide employees who have disabilities with a modified work and leave schedule as well as reasonable accommodations based on the employee’s condition. It also defines the employer’s rights, including the maximum amount of ADA leave an employee can receive without causing the employer undue expense.
The FMLA requires employers to provide eligible employees with 12 weeks of job-protected leave. The leave is unpaid but retains the worker’s corporate health policy with the same coverage as during their active work schedule. This includes but is not limited to maintaining their coverage terms, continuing to cover their dependents and spouses, and requiring employers to continue contributing to their premiums.
The ADA requires employers to provide employees who have disabilities with a modified work and leave schedule as well as reasonable accommodations based on the employee’s condition. It also defines the employer’s rights, including the maximum amount of ADA leave an employee can receive without causing the employer undue expense.
Internal Policies
Employers must establish an internal leave of absence policy to define the criteria for their employees’ leaves of absence, including their benefits according to the type of leave, the procedures for initiating leave, and the terms of their return from leave. These internal policies must also align with the employee’s contract, federal regulations, and government benefits.
Continuation of Coverage Policy
The Consolidated Omnibus Budget Reconciliation Act (COBRA), along with state laws, defines an employee’s continuation of coverage benefits. Notably, not all leaves of absence are covered by COBRA. If the employee can still participate in the company’s group health and employee welfare plans, they may not qualify for absence benefits.
If the leave of absence reduces their hours to the point that they lose eligibility for these plans, the continuation of coverage from COBRA may step in to restore their benefits. Employers are responsible for offering a continuation of coverage through COBRA to qualifying employees.
With leave laws varying drastically by state, it’s crucial for employers to stay informed and proactive in managing employee benefits during a leave of absence. Contact us today to learn more about ensuring compliance and refining your employee benefits process.
