Employee Failure to Pay - Health Plan Premium Payments

An employer's obligations to maintain health insurance coverage cease under FMLA if an employee's premium payment is more than 30 days late, absent an established employer policy providing a longer grace period. 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. The notice must be mailed to the employee at least 15 days before coverage is to cease, and must advise 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.

The employer may drop the employee from coverage retroactively 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, provided the 15-day notice was given.

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. If an employer terminates an employee's insurance in accordance with the FMLA and fails to restore the employee's health insurance upon the employee's return, the employer may be liable for:

• Benefits lost by reason of the violation;
• Other actual monetary losses sustained as a direct result of the violation; and
• Appropriate equitable relief tailored to the harm suffered.

You may also wish to review employee reinstatement requirements.

Continue to Maintenance of Benefits Under Multi-Employer Health Plans or Return to Employee Rights and Responsibilities Menu.

For more information on this aspect of the FMLA, see the FMLA regulations: § 825.212