Pay back of premiums when they don't return

GLC

I once heard that to make an employee pay back insurance premiums if they don't return from FMLA is only when the leave is UNPAID. If an employee has used sick or vacation time to cover their period of absence and they don't return to work, can you stil make them pay back for the cost of the premiums. How would you then handle it if some of the leave is unpaid and some is paid?

LindaS

The FMLA regulations DO allow an employer to recup premiums the employer paid on behalf of an employee if the employee does not return from leave regardless of whether the leave is paid or unpaid. Was the employee notified when they went out on leave that they were required to pay their portion of the premiums during the leave? This is something we include in the notification approving the leave. One thought for future reference when they are going to be receiving pay is to speak with them and recommend they have their insurance premiums deducted from their checks. This is not something you can require but in my experience most employees take this option.

Hope this helps!

NaeNae55

I am no expert, but here is what I would do.

First, tell every employee leaving on FMLA that they must use all paid leave available (float holidays and PTO) before going on unpaid leave. All regular premium deductions will continue while they are being paid. If they incur premiums while on an unpaid status, they must pay the premiums in a timely manner to continue the insurance. I would come to an agreement with each individual about when we could expect to see their premiums. Since we have a Section 125 plan that make all premiums pre-tax, we would try to recoup the premiums after the employee returns to work. You may want to do it differently. Of course, this would depend upon how long the employee is out on unpaid leave, and how much the employee's portion is. You would need to setup all of the guidelines before anyone used it to be fair and consistant.

If I had an employee out on unpaid leave who incurred insurance costs and then did not pay and did not return to work, I would write them a letter giving them a deadline to come up with the premiums. If they do not, their insurance is terminated as of the regular cutoff date (1st of the month for most, but for some people it is the day the employee terminated employment or some other date). If I had a 1st of the month situation where we deducted a portion of the premium before the employee went on unpaid status and there was still an amount remaining, I would tell the employee if they don't pay the balance of the premium within X amount of days, that we would refund the portion they already paid and they would not have coverage for any portion of that month (unless they take COBRA) and what will happen to those insurance claims already paid. I would then notify my carrier. If they have paid any claims for that month they will go to the providers and ask for the money back. It is amazing how quickly an employee will decide to pay a premium when they know that they may be liable for those medical expenses. If they employee doesn't have any insurance claims, they may not care, but at least you gave them the opportunity to keep their coverage for the period they were employed by you.

Whew! I hope it doesn't take as long to read this as it took to write it. x:-)

Good luck!

Neferlaw

Regulation 825.213(a) provides that "an employer may recover its share of health plan premiums during a period of unpaid FMLA leave" . . . I interpret this to mean that if the leave is paid, you may not collect the premiums if the employee fails to return.

LindaS

Neferlaw is correct - if the leave is paid and the employee has paid their normal portion of the health insurance premiums, an employer cannot go back to collect their portion of the premiums. If the leave is unpaid and the employee has not paid their normal portion and the employer maintained them on the insurance, the employer can try to get that money back.