Leaves Of Absence And Group Insurance Termination – Employment and HR – United States – Mondaq News Alerts

United States:

Leaves Of Absence And Group Insurance Termination

04 April 2022

Masuda, Funai, Eifert & Mitchell, Ltd.

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When considering whether to approve an employee’s leave of
absence request or upon learning that an employee will be away from
work for an extended period due to a work-related injury, few
employers confirm the permitted “coverage extension”
provision in their group health insurance plan document. Instead,
many employers simply allow such employees to continue their group
health insurance coverage for months or years under the active
employee group health insurance plan.

Although some leaves of absence are protected (i.e., FMLA) and
may require an employer to continue an employee’s active group
health insurance for a specified period of time, many leaves of
absence are not protected by a federal or state statute. As a
result, an employee on an unprotected leave of absence may be
entitled to remain on the active employee plan for a limited period
of time. Some group insurance plans require that an employee’s
active insurance coverage be terminated on the last day of the
month in which the leave of absence begins, or a few months later.
In short, active group health insurance coverage for an employee on
a leave of absence may need to be terminated based on the terms of
the group insurance contract. This loss of insurance coverage is
both required by the group health insurance plan provisions and a
qualifying event under the Consolidated Omnibus Budget
Reconciliation Act (COBRA) or state equivalent law.

To avoid employees being improperly retained on the active
employee group health insurance plan during a leave of absence,
employers should review their group health insurance plan documents
to confirm the maximum period of time that employees are permitted
to be retained on the active group health insurance plan before
being offered COBRA continuation coverage. Because the plan
document language may be vague, employers should contact their
insurance brokers and/or call their Masuda Funai relationship
attorney for a proper interpretation.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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