(a)(1) In the absence of an established employer policy providing a
longer grace period, an employer's obligations to maintain health
insurance coverage cease under FMLA if an employee's premium payment is
more than 30 days late. In order to drop the coverage for an employee
whose premium payment is late, the employer must provide written notice
to the employee that the payment has not been received. Such notice
must be mailed to the employee at least 15 days before coverage is to
cease, advising that coverage will be dropped on a specified date at
least 15 days after the date of the letter unless the payment has been
received by that date. If the employer has established policies
regarding other forms of unpaid leave that provide for the employer to
cease coverage retroactively to the date the unpaid premium payment was due,
the employer may drop the employee from coverage retroactively in
accordance with that policy, provided the 15-day notice was given. In
the absence of such a policy, coverage for the employee may be
terminated at the end of the 30-day grace period, where the required
15-day notice has been provided.
(2) An employer has no obligation regarding the maintenance of a
health insurance policy which is not a "group health plan." See Sec.
825.209(a).
(3) All other obligations of an employer under FMLA would continue;
for example, the employer continues to have an obligation to reinstate
an employee upon return from leave.
(b) The employer may recover the employee's share of any premium
payments missed by the employee for any FMLA leave period during which
the employer maintains health coverage by paying the employee's share
after the premium payment is missed.
(c) If coverage lapses because an employee has not made required
premium payments, upon the employee's return from FMLA leave the
employer must still restore the employee to coverage/benefits
equivalent to those the employee would have had if leave had not been
taken and the premium payment(s) had not been missed, including family
or dependent coverage. See Sec. 825.215(d)(1) through (5). In such
case, an employee may not be required to meet any qualification
requirements imposed by the plan, including any new preexisting
condition waiting period, to wait for an open season, or to pass a
medical examination to obtain reinstatement of coverage. If an employer
terminates an employee's insurance in accordance with this section and
fails to restore the employee's health insurance as required by this
section upon the employee's return, the employer may be liable for
benefits lost by reason of the violation, for other actual monetary
losses sustained as a direct result of the violation, and for
appropriate equitable relief tailored to the harm suffered.
[73 FR 68091, Nov. 17, 2008]
