FMLA Premium Collections

The Family and Medical Leave Act (FMLA) requires applicable employers to extend group health plan coverage to employees on a qualified leave under the same terms as if they were actively working. Group health plans include, but are not limited to medical, dental, vision and Flexible Spending Accounts (FSAs).

Employer and employee contributions for group health plan coverage must generally remain unchanged during a FMLA-leave. The challenge for employers is collecting employee contributions resulting from a FMLA-leave. Employers have three options to consider:

1. Pre-pay option: Employees make contributions in advance to the FMLA-leave. This is typically done through an accelerated payroll deduction. For example, an employee may have a large lump sum deducted from the paycheck received just prior to the FMLA-leave. This option would require advanced notice that an FMLA-leave was going to occur which isn’t realistic in many scenarios. Additionally, while an employer may allow the pre-pay option, they also have to provide at least one other payment option for employees.
2. Pay-as-you-go option: Employees make installment payments during the FMLA-leave. For example, the employee may be required to periodically send a check to the employer for their portion of premium. Payments are typically made after-tax unless there is compensation being paid to the employee from which the contribution can be salary reduced. Employees on a FMLAleave cannot be required to pay their portion of premium more frequently than contributions are paid for employees who are actively working. As an example, if an employer normally withholds premiums from employee paychecks every two weeks, an employee on a FMLA-leave cannot be required to pay their portion more frequently than every two weeks.
3. Catch-up option: Employers cover the employee’s portion of premium during the FMLA-leave, and employees make catch-up contributions upon return from the FMLA-leave. For example, the employee may make double their normal contribution until all premiums have been repaid. The risk here is that the employee may not return to work after a FMLA-leave.

Employers should clearly document in their FMLA policy which premium payment option(s) will be available to employees. This will avoid confusion and spell out expectations of the employer and employee when a FMLA-leave situation occurs.