Leave of Absence? Who Pays the Insurance Bill?

Beth Dean 03.04.24
Graphic - Blog 2024-02-27 - Insurance During Leave of Absence

How to handle insurance during leave of absence

Employee leaves of absence from work raise questions, especially about health benefits. Who shoulders the insurance premiums during the leave? Let’s untangle this knot one thread at a time.

Paid Leave: Business as Usual

Paid leaves are straightforward. Simply maintain regular benefit deductions from their paychecks as usual. It’s a seamless continuation of their coverage.

Unpaid Leave: Choices, Choices

Things get more nuanced with unpaid leave. Here, you have three options for handling the employee’s health insurance premiums. One size does not fit all, so collaborate with your employee to create a repayment plan that works for both of you.

  1. Upfront Payment: Employees can handle the entire premium amount before their leave begins. They can do this in one big payment or increments.
  2. Monthly Payments: They can stay on top of their premiums with regular monthly payments during their leave. This keeps their coverage active without a high upfront cost or arrears.
  3. Future Repayment: Employees can agree on a repayment plan with the company once they return. This eases the financial burden during their leave and spreads out the cost after returning.

Consider the Length of the Leave

Keeping an employee’s insurance active for a leave that spans longer than three months (even for extended illness or workers’ compensation injuries) can be tricky. Why? Health insurance companies may be wary. 

Suppose the carrier finds out the employee has active coverage but isn’t an active employee. In that case, the health insurance company could drop the employee’s coverage. Not ideal! If facing this situation, contact your HR expert at Nextep for guidance.

FMLA, Maternity Leave, and Early Departures

Employees often take time off for FMLA leave, such as maternity or to care for a seriously ill family member. After finishing the leave, they could potentially leave the company before repaying the insurance premiums accrued during their time away. Here’s how you can handle it:

Repayment

Suppose an employee doesn’t return after exhausting their FMLA leave, and the reason isn’t beyond their control or health-related. In that case, you can recover your share of paid premiums. To claim this right, employers may request proof like medical certification from the employee. If the employee fails to provide requested documentation within 30 days or didn’t face uncontrollable circumstances to prevent their return, the employer may pursue full premium recovery.

Employee Debt and Recovery Options

Unpaid premiums may become an employee debt if they don’t return. As the employer, you can deduct it from any upcoming paychecks or pursue legal action for recovery. However, returning to work for 30+ days or direct retirement after leave satisfies the FMLA “return” requirement, preventing any premium recovery.

See the Department of Labor’s website for more details. 

The Takeaway: Communication is Key

Clear communication is your best friend. Discuss all options with your employee upfront, lay out the rules, and answer any questions they have.

By approaching this process with transparency and understanding, you can ensure a smooth ride for you and your employees.

Also on Nextep

A new program impacting Minnesota employers called Paid Leave launches in January 2026. The program offers financial benefits to employees facing qualifying life events, requiring contributions from both employers and workers. This initiative aims to provide stability for employees during challenging times, potentially leading to a more engaged and productive workforce. What Does Paid Leave […]
Read more
Implementation Date: August 1, 2024 Summary Effective August 1, 2024, commissions, incentive pay, and bonuses are considered due in final wages in the state of Louisiana if they have been earned at the time of separation and have not been modified in accordance with a written policy addressing such payments. The amended law also specifies […]
Read more
Effective July 19, 2024, the Occupational Safety and Health Administration (OSHA) updated its Hazard Communication (HazCom) Standard. This change improves the amount and quality of information on labels and safety data sheets (SDSs). The final rule aims to better inform employees about the chemicals they work with and improve workplace safety. Here’s a summary of […]
Read more
Several states and local jurisdictions will increase their minimum wage rates on July 1, 2024. Below is a summary of these changes and guidelines to help you comply with your minimum wage requirements.  As a reminder, when federal and state or local payroll laws differ, the employer must adhere to the law that benefits the […]
Read more
Get ready for changes! As of July 1, 2024, a new wave of state laws are set to go into effect across the country. These updates impact everything from worker protections and minimum wage to important regulations for businesses. Whether you’re an employer, employee, or simply a resident staying informed, this article will guide you […]
Read more
Exemptions from Overtime Pay: A Guide for Employers The Department of Labor (DOL) has announced significant changes to overtime regulations for salaried employees exempt from overtime pay. Here’s a breakdown of what you need to know and how to prepare: Key Changes: Increased Salary Thresholds: Currently, salaried workers earning more than $35,568 annually are exempt […]
Read more
A Game Changer for Employers The Federal Trade Commission (FTC) recently made a significant change regarding employers’ use of non-compete agreements. The final rule issued by the FTC prohibits the use of non-compete agreements for many workers, which is a departure from the longstanding practices of many companies. This decision is already facing legal challenges, […]
Read more
Key Points for Employers About the Latest Harassment Guidance The Equal Employment Opportunity Commission (EEOC) has recently updated its guidelines on workplace harassment enforcement. This was the EEOC’s first update in more than 30 years. The updates are intended to clarify and modernize existing standards. These changes take into account recent legal developments and the […]
Read more
What You Need to Know About PWFA The Equal Employment Opportunity Commission (EEOC) recently released the final regulations for the Pregnant Workers Fairness Act (PWFA). These regulations, taking effect on June 18, 2024, update the PWFA rules put into place in 2023 and significantly impact how employers with at least 15 employees accommodate workers with […]
Read more
When Addiction Strikes at Work The issue of addiction in the workplace presents a complex challenge for both employers and employees. The Americans with Disabilities Act (ADA) protects qualified individuals with disabilities, but active addiction itself isn’t necessarily covered. Here’s a breakdown of rights and responsibilities: Employee Rights Under the ADA Generally Not Covered: The […]
Read more
What is Considered “Reasonable”? What happens when an employee with a disability needs an adjustment to perform their job effectively? This is where reasonable accommodations come in. However, the question often arises: what exactly is considered “reasonable” under the Americans with Disabilities Act (ADA)? Striking a Balance The key is to find a balance between […]
Read more
It’s time for an ADA refresher! The Americans with Disabilities Act (ADA) is a cornerstone of civil rights legislation, ensuring equal employment opportunities for people with disabilities. As an employer, understanding your obligations under the ADA is crucial. Here’s a breakdown of the key points: What qualifies as a disability? The ADA defines a person […]
Read more

Download Our App


Download the Nextep Mobile App in Apple iOS or Google Play