(a) During any FMLA leave, an employer must maintain the employee's
coverage under any group health plan (as defined in the Internal Revenue
Code of 1986 at 26 U.S.C. 5000(b)(1)) on the same conditions as coverage
would have been provided if the employee had been continuously employed
during the entire leave period. All employers covered by FMLA, including
public agencies, are subject to the Act's requirements to maintain
health coverage. The definition of ``group health plan'' is set forth in
Sec. 825.800. For purposes of FMLA, the term ``group health plan'' shall
not include an insurance program providing health coverage under which
employees purchase individual policies from insurers provided that:
(1) no contributions are made by the employer;
(2) participation in the program is completely voluntary for
employees;
(3) the sole functions of the employer with respect to the program
are, without endorsing the program, to permit the insurer to publicize
the program to employees, to collect premiums through payroll deductions
and to remit them to the insurer;
(4) the employer receives no consideration in the form of cash or
otherwise in connection with the program, other than reasonable
compensation, excluding any profit, for administrative services actually
rendered in connection with payroll deduction; and,
(5) the premium charged with respect to such coverage does not
increase in the event the employment relationship terminates.
(b) The same group health plan benefits provided to an employee
prior to taking FMLA leave must be maintained during the FMLA leave. For
example, if family member coverage is provided to an employee, family
member coverage must be maintained during the FMLA leave. Similarly,
benefit coverage during FMLA leave for medical care, surgical care,
hospital care, dental care, eye care, mental health
counseling, substance abuse treatment, etc., must be maintained during
leave if provided in an employer's group health plan, including a
supplement to a group health plan, whether or not provided through a
flexible spending account or other component of a cafeteria plan.
(c) If an employer provides a new health plan or benefits or changes
health benefits or plans while an employee is on FMLA leave, the
employee is entitled to the new or changed plan/benefits to the same
extent as if the employee were not on leave. For example, if an employer
changes a group health plan so that dental care becomes covered under
the plan, an employee on FMLA leave must be given the same opportunity
as other employees to receive (or obtain) the dental care coverage. Any
other plan changes (e.g., in coverage, premiums, deductibles, etc.)
which apply to all employees of the workforce would also apply to an
employee on FMLA leave.
(d) Notice of any opportunity to change plans or benefits must also
be given to an employee on FMLA leave. If the group health plan permits
an employee to change from single to family coverage upon the birth of a
child or otherwise add new family members, such a change in benefits
must be made available while an employee is on FMLA leave. If the
employee requests the changed coverage it must be provided by the
employer.
(e) An employee may choose not to retain group health plan coverage
during FMLA leave. However, when an employee returns from leave, the
employee is entitled to be reinstated on the same terms as prior to
taking the leave, including family or dependent coverages, without any
qualifying period, physical examination, exclusion of pre- existing
conditions, etc. See Sec. 825.212(c).
(f) 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.
(g) If a ``key employee'' (see Sec. 825.218) does not return from
leave when notified by the employer that substantial or grievous
economic injury will result from his or her reinstatement, the
employee's entitlement to group health plan benefits continues unless
and until the employee advises the employer that the employee does not
desire restoration to employment at the end of the leave period, or FMLA
leave entitlement is exhausted, or reinstatement is actually denied.
(h) An employee's entitlement to benefits other than group health
benefits during a period of FMLA leave (e.g., holiday pay) is to be
determined by the employer's established policy for providing such
benefits when the employee is on other forms of leave (paid or unpaid,
as appropriate).
[60 FR 2237, Jan. 6, 1995; 60 FR 16383, Mar. 30, 1995]
