306 6th Ave. San Mateo, CA 94401 | Ph: (650) 348-6234 | Fax: (650) 401.8234 | admindesk@aeisadvisors.com

When the Family and Medical Leave Act went into effect in 1993, advocates cheered. But they also lamented the fact that although eligible workers were now guaranteed leave from a job for having a child or other family events, that time would come without a paycheck.

Now, more than a quarter of a century later, the idea of paid parental or family leave in the U.S. appears to be gaining momentum. Both major political parties are stumping for proposals that would provide paid leave — though how the benefit would get paid for differs substantially—and several states and municipalities have already passed laws mandating it.

Paid leave benefits for new parents and other caregivers have also ticked up among the largest 20 U.S. companies in recent years, though benefits vary widely—granted sometimes just to birth mothers. Still, paid family leave of all types increased significantly between 2016 and 2018, according to a Society for Human Resource Management survey of 3,500 HR professionals.

That the U.S. would be last among developed countries to enshrine in law paid parental leave, and that it would happen now under a presidential administration seen by many as unfriendly to workers, strikes many as unlikely.

But several political, societal and business factors now coming together explain the new energy.

“I think what’s in the air is a larger conversation about gender inequality,” says Wharton management professor Stephanie Creary. “People are starting to see the issue of parental leave and gender bias as one and the same.”

In the last five years or so, the conversation about gender bias in the tech sector has ramped up, she notes, and in order to get more buy-in many companies have linked it to a conversation about parents. “That parent also is someone who is male,” Creary says. “It’s something that resonates with many people. By making gender inequality also about parents, it has allowed more people, including men, to champion this issue. You are seeing more men talking about parental leave, and that’s a new phenomenon.”

Three trends in particular are contributing to heightened attention around paid parental leave, says Wharton management professor Matthew Bidwell. “The first, of course, is that the nature of work has changed with the demise of the single-breadwinner model, and people are much more conscious of the disconnect between employment policies and the realities of daily life,” he says. “On top of that there has been this big shift toward parents spending more time with their children despite the fact that both parents are now more likely to be working.

“Also, there has been this enormous wave of anger around multiple aspects of the ways that women have been treated that is roiling the political system. Women currently bear the brunt of the tensions between bringing up a family and being at work,” says Bidwell. “So any politician who is paying attention is trying to figure out how to appeal to women voters. Parental leave is a really obvious issue.”

In the current crop of declared and near-declared candidates in the 2020 presidential race, “everybody has got to have an opinion about this,” says Stew Friedman, director of the Wharton Work/Life Integration Project and author of the book Total Leadership. Five years ago, paid parental leave was not a mainstream issue, and now it is, he says.

That the U.S. still does not have paid parental leave is a vestige of a former societal order, says Friedman. “We’re in transition as a society, and I think the traditional ideology remains. It’s weakening, but still too pervasive—this idea of the single-earner household where the primary income generator is the man who is always available for work and the woman is the caretaker of the home. We need more progressive social policy, favored by most Americans, that fits with the pressing realities of today’s working families and that truly invests in meeting their needs.”

Reaching Across the Aisle

It is perhaps adding momentum that one prominent figure advocating for federally mandated paid family leave is Ivanka Trump. “It’s encouraging to see members on both sides of the aisle putting forward paid family leave proposals,” said President Trump’s daughter in a statement provided to The Washington Post.

But the details on proposals from Democrats and Republicans differ greatly. Sen. Marco Rubio, R-Fla., announced a proposal in 2018 in which new parents could draw down on their Social Security benefits earlier in life, providing income for parental leave but forcing those workers to extend working years or face reduced retirement benefits later.

“It strikes me as a bad idea,” says Olivia S. Mitchell, Wharton professor of business economics and public policy and executive director of the Pension Research Council. For one thing, Social Security is already facing “enormous financial insolvency problems, and so anything that would stress the ability of the system to pay benefits troubles me a great deal.”

Current projections are that by 2034, in order to meet its obligations, Social Security will have to cut benefits by about 30% or raise taxes by 60%, she notes. “We need to face as a nation what Social Security needs in order to pay its benefits, but picking away at the edges by having it offer other benefits for other purposes doesn’t seem viable.”

The other math problem that would come with the proposal, she said, is that proponents of the idea assume that people will eventually pay more into the system by virtue of the fact that they will work longer to make up for the money they took out as young parents. “But it’s a very big assumption we’re making here,” Mitchell said.

“Why would you require people to hurt their long-term financial security to take care of their kids when there are other alternatives? And this would hurt people at the bottom end of the economy more than at the top end,” says Friedman. “A healthy society is one that cares for its young without forsaking the needs of elderly people, and this tradeoff that’s being imposed in the Rubio plan I think is misguided.”

Democrats are floating their own proposals. In February, presidential candidate Sen. Kirsten Gillibrand, D-N.Y., and Rep. Rosa DeLauro, D-Conn., reintroduced the Family Act, which would give eligible workers up to 12 weeks of pay at two-thirds of their monthly wages—for new parents as well as caregivers dealing with serious health issues of a parent, spouse or domestic partner or child. It would be funded jointly by employer and employee payroll deductions of two cents per $10 in wages.

In perhaps the most promising sign of progress, a bi-partisan proposal from the Senate is emerging. Republican Sen. Bill Cassidy (La.) and Democratic Sen. Kyrsten Sinema (Ariz.) are crafting a paid family leave proposal, though the details on how it would be funded and what it would provide are unclear. As discussed right now, its benefit term would be, in the eyes of many, inadequate. “Six to eight weeks is maybe not as long as some would like, but is something we could afford,” Cassidy recently told Bloomberg.

But what is clear is the disconnect between the 17% of American workers who get paid parental leave and the 84% who say they would like to see paid family leave for all workers, according to a 2018 survey published by the National Partnership for Women & Families.

It’s easy to see why the idea has become popular. The financial burdens created by taking unpaid leave are substantial, according to a Pew survey published in 2017. That snapshot found that 78% of respondents who received no pay or only part of their regular pay when they took leave from work had to cut back on spending to make up for the lost income. About half said they ate into savings, 40% said they cut their leave time, nearly 40% took out debt, a third said they delayed paying bills, about a quarter reported borrowing money from friends or family, and 17% went on public assistance.

The numbers cut even deeper for households making $30,000 or less, with half of those on family leave without full pay tapping public assistance.

Various Models for Benefits and Funding

Whatever federal proposal for paid family leave ends up prevailing, current programs at other levels of government and in other countries offer some guidance.

“I don’t think we have a good handle on the ‘optimal’ system yet, but there are some good arguments for expanding parental leave in the U.S., which is currently an outlier relative to other developed countries,” says Benjamin B. Lockwood, Wharton professor of business economics and public policy. “We already have many public policies devoted to investing in children and providing support for working parents—from the Earned Income Tax Credit to the Child Tax Credit to our public education system. Given that commitment, it makes sense to me that we would want to provide support during the crucial formative first months of a child’s life.”

The system in Iceland is worth considering, he says. “It has a relatively generous parental leave policy, but it is a bit distinctive in that it has substantial non-transferable (‘use it or lose it’) paid leave for fathers as well as mothers. That helps even out childcare roles between parents.” Moreover, one concern about generous leave policies is they could have the unintended consequence of employers passing over qualified female job applicants in favor of men who are less likely to take parental leave. “A policy like Iceland’s reduces the asymmetry between men and women in that respect, and so may create more equal hiring treatment,” Lockwood adds.

One concern is on the part of small businesses, says Andrea Zuniga, vice president of legislative affairs for Paid Leave for the United States, a three-year-old advocacy and lobbying group. “On the ground when we are talking to small business owners, they say, ‘I’d love to pay this benefit but I don’t have the means to do it.’”

But Zuniga points to systems being used in states that use an insurance model to fund paid-leave programs. In Rhode Island, for instance, workers pay a 1.2% tax on the first $68,100 in earnings, she said. Benefits come to about 60% of an employee’s weekly wage, up to a maximum weekly benefit of $817.

Another concern is how businesses deal with covering the work of parents or caregivers on leave. Larger firms can redistribute the work, and the change creates minimal ripples. But what about in smaller workplaces or on teams? If a worker disappears for six weeks or six months, temps must be brought in.

“It is quite common for a temp to be hired for several months to cover somebody on parental leave,” says Bidwell, adding that it’s “obviously not a painless process.”

Still, short-term pain might be a good investment in the long-term gain. Friedman says some of the best evidence for why paid parental leave is a good idea comes from California and other states that have already enacted forms of Family Temporary Disability Insurance programs.

“The California model has employers and employees pitching in a tiny amount, two-tenths of a percent of payroll contributions, that funds a program that has resulted in better retention of women in companies and without the anticipated, but not observed, fears of loss of productivity. That model seems to be working,” says Friedman. “You get to hold onto talented and experienced people and reduce the likelihood of all of the indirect costs of employees having to find support to take care of their children and the elderly, especially when unexpected problems come up. It’s a win for everybody.”

But legal provisions for paid parental leave are one thing; how it plays out in reality another. Given how competitive the workplace has become, some workers may hesitate to take time off, especially where there is a certain kind of corporate culture.

Unfortunately, there is still career stigma attached to taking leave, says Creary. “In order for the fear of missing out at work to lessen, the culture of workplaces would need to change more broadly to value taking time off. So the stigma is that someone is taking time off at all—not that they’re just taking time off for parental leave.”

Taking time off means working extra hard when you get back, says Bidwell, “reactivating your social network, catching up on what you’ve missed, that sort of thing. Obviously if you are just coming back from parental leave you are already massively stretched. Ultimately, there is a basic tension between extremely competitive careers that reward those who work hardest, and having a rich, fulfilling family life, and those can be difficult of tensions to reconcile.”

It is possible that the more common parental leave becomes, the less serious of a concern this will be. “It’s a bit of a chicken and egg problem,” Bidwell says.

In fact, many feel it may not be a problem much longer. Says Friedman: “Change is finally here.”

 

By Knowledge at Wharton
Originally posted on HRExecutive.com

Question: We give year-end bonuses based on attendance, and employees with a certain number of absences are disqualified. If an employee took FMLA leave, can we count those absences against them and withhold the attendance bonus?

Answer: Yes, if you apply the rubric used to qualify employees for the bonus consistently across all “equivalent leave status” reasons for absence. For example, if you count days off for vacation, paid time off, jury duty, or military leave as absences for the purpose of determining who receives the bonus, you can also count days taken under Family and Medical Leave Act (FMLA) leave.

The same answer applies to bonuses earned for other goals that may be impacted by FMLA leave, such as sales targets or total numbers of hours worked.

If a bonus or raise is not tied to a specific condition, but rather is a cost of living or annual increase provided by all employees, an employee may not be disqualified on the basis of having taken FMLA leave.

 

Originally posted on ThinkHR.com

You have a business and it is growing – Congratulations!

As your company grows and you hire more employees, there are milestones that you will hit.  Some of these milestones come with additional responsibilities that you need to attend to, such as Cobra, HCSO, FMLA, Sexual Harassment Prevention Training and the Affordability Care Act’s Large Employer Mandate.

For example, if you are a company based in California and offer an employee benefits plan that includes medical insurance, you are obligated to allow former or terminated employees and their enrolled dependents to enroll in Cal-COBRA if they are no longer eligible to be enrolled in your plan.  Once you reach 20 employees or more for an average of 50% or more of the previous calendar year, then you are obligated to start offering enrollment in Federal COBRA for those plan participants and enrolled dependents if they are no longer eligible to be enrolled in your plan.

Additionally, if you have any employees working in the City of San Francisco, you would also need to comply with the Health Care Security Ordinance (HCSO).  However, these two things would not happen at the same time because while they both require you have 20 or more employees before you have to comply, they count those employees differently, and over a different length of time.

Federal COBRA counts employees by their classification.  A full-time employee is counted as 1, and part-time employees are counted in fractions.  So you may have 15 full-time employees, and 5 part time employees and you would NOT be subject to Federal COBRA because your part time employees work an average of 20 hours per week, meaning all together they only count as 2.5 full-time equivalents which when combined with your full-time employees puts your count at 17.5.

The HCSO counts employees by head count, and they do it per quarter.  So if you have 19 employees during one quarter of the year, you don’t need to comply.  But if you have 20 employees for at least 13 weeks of the following quarter, you would need to comply.

Is your head spinning yet?

As you move further along and you reach 50 employees, there are more regulations that may now be applied to your company.  They are the Family Medical Leave Act (FMLA), Sexual Harassment Prevention Training for California businesses, and the Pay or Play provision of the Affordable Care Act.  As one might expect, each regulation counts employees in a different way.

When you have had 50 or more employees over 20 weeks during the current or previous calendar year, you are subject to FMLA.  The weeks do not have to be consecutive weeks.  Additionally, FMLA counts the employees on your payroll register even if they are not being paid.  If they are on your payroll register, they are counted.  Each person is counted as 1, regardless of the number of hours worked.

For sexual harassment prevention training in California, once you have 50 or more employees (regardless of full-time or part time status) for 20 or more consecutive weeks, you have to begin offering training for your management staff every 2 years, and within 6 months of promoting an employee to a managerial position.

The Applicable Large Employer or ALE classification under the Affordable Care Act counts employees in yet a different way.  With regards to determining ALE status, you generally count each full-time employee as 1, and for part-time, seasonal, and variable-hour employees you count the number of hours they all worked collectively during a month (do not include more than 120 hours for any employee), then divide the total hours by 120 hours to get how many Full-Time Equivalent Employees (FTEs) you have.  You then add the number of full-time employees, to your FTE’s to get your total employee count.  If you average 50 or more employees during the calendar year, you are considered an ALE the following tax year.  For example, if you average 50 or more employees during the 2018 calendar year, you would be subject to the Pay or Play Mandate and the reporting requirements associated with it for the year 2019.

If your employee count stays at 50 or above in 2019, you would continue to be an ALE with all associated requirements in 2020.  If your employee count dips below 50 in 2019, then you would not be considered an ALE in the year 2020.

The Pay or Play Mandate (Employer shared responsibility) means that as an ALE you are required to offer minimum value, affordable coverage to your full-time employees and their dependent children, or potentially face a penalty from the IRS.

No one is an expert in all things, which is likely why your business is doing well and thriving: because you fulfill a need or expertise in the area that you specialize in.  As a successful business owner you know it is advantageous to have strong partners in your corner to help lend their strengths to your areas of weakness.

Having a strong benefits advisor to assist you in navigating these hurdles, speed bumps, and curves in the road is essential.  Whether you have the resources to handle these regulations in-house, or if you need someone to recommend a trustworthy third party vendor to handle it for you, we are pleased to be able to fulfill that need for you.

 

by Elizabeth Kay

FMLA Forms Expiration Date Extended

The Department of Labor’s model Family and Medical Leave Act (FMLA) notices and certification forms were originally due to expire on May 31, 2018, but were extended twice, and now expire on August 31, 2018. Once approved by the Federal Office of Management and Budget, the new FMLA forms will be valid through 2021.

The forms with the extended expiration date of August 31, 2018 are as follows:

See the WHD forms page

OSHA Proposal to Eliminate Electronic Submission of Forms 300 and 301 for Certain Large Employers

On July 27, 2018, the Occupational Safety and Health Administration (OSHA) issued a Notice of Proposed Rulemaking (NPRM) to better protect personally identifiable information or data that could be re-identified with a particular individual by removing provisions of the “Improve Tracking of Workplace Injuries and Illnesses” rule. OSHA believes this proposal maintains safety and health protections for workers, protects privacy, and reduces the burdens of complying with the current rule.

The proposed rule eliminates the requirement to electronically submit information from OSHA Form 300 (Log of Work-Related Injuries and Illnesses), and OSHA Form 301 (Injury and Illness Incident Report) for establishments with 250 or more employees that are currently required to maintain injury and illness records. These establishments would be required to electronically submit information only from OSHA Form 300A (Summary of Work-Related Injuries and Illnesses).

Under the current recordkeeping rule, the deadline for electronic submission of calendar year (CY) 2017 information from OSHA Forms 300 and 301 was July 1, 2018. In subsequent years, the deadline is March 2. OSHA is not currently accepting the Form 300 or 301 data and will not enforce the deadlines for these two forms without further notice while this rulemaking is underway. The electronic portal collecting Form 300A data is accepting CY 2017 data, although submissions after July 1, 2018, will be considered late.

 

Originally published by Thinkhr.com

“Gary Wheeler, partner at Constangy, Brooks, Smith & Prophete, LLP, a well-respected national employment law firm and legal partner to ThinkHR, explains five mistakes he sees frequently in his clients’ employee handbooks.”

It’s too long, inconsistent, or redundant.

Like with your house, when you live with an employee handbook for a while, you collect things and it gets cluttered. Your handbook gets longer and runs the risk of having internal inconsistencies. Once or twice a year, it’s a good idea to give it a thorough review to remove inconsistent or redundant policies, plus make it shorter and more readable. If you want people to follow the rules, it’s important to have them be clear and accessible.

It reads more like an operations manual.

An overly-detailed handbook becomes too much of a procedures manual. For example, it’s important to state that complaints of harassment will be responded to with a prompt and thorough investigation. But the policy should avoid giving too much detail, such as the number of days to expect each step of the investigation to take. Ultimately, if the employer needs to be flexible and deviate from unnecessary details in the handbook, this can be used against them.

Another area that often gets too detailed is the progressive discipline policy. If an employer has a collective bargaining unit, there are reasons these details may need to be given. But sometimes nonunion employers will have progressive disciplinary policies in their handbooks that don’t allow them to maintain flexibility in handling employee behavior or performance issues.

It sounds too overbearing or paternalistic.

Some handbooks include policies that, as written, sound more intrusive and paternalistic than they really are in operation. For example, a financial services company had a policy that required employees to handle their finances in a responsible manner, which sounds intrusive. However, the policy was truly only concerned with financial accounts they had through the employer. The policy wasn’t ultimately harmful in that case, but it required further explanation to make it clear the employer wasn’t concerned with what the employees were doing with their personal lives. Carefully tailored language can help avoid a perception of the employer being overbearing or paternalistic.

It’s missing information that affects enforcement.

Another mistake is including language that, while acceptable, isn’t the best training tool for supervisors because it omits certain nuances. For example, an attendance policy may state a specific number of absences that are unacceptable during a certain timeframe. If the policy fails to state that absences covered by FMLA or local sick leave rules don’t count against employees, you can end up having a well-meaning supervisor discipline an employee for absences that should have been allowed.

It doesn’t identify the right contact people.

One of the things I see frequently is employers missing the opportunity to specify who their company’s “first responders” are. These are the company representatives who will receive reports of anything from alleged misconduct to medical leave.

Employers should be selecting these people appropriately and training them about their role. For example, a person who receives reports of absences should understand when FMLA or local leave laws might come into play. A person who may receive reports of harassment should be trained to determine whether it’s a general grievance best handled by an immediate superior or if it will need a more formal investigation.

However, the handbook will be more durable if you mention the reporting person by title and not name. Be sure the titles used in the handbook match the titles that actually exist in your organization; for example, don’t tell someone to report misconduct to the HR director if you don’t have an HR director.

Get it All

Evaluate your employee handbook using our free Employee Handbook Self-Audit. If it’s time to update or replace your handbook, trust the ThinkHR Multi-State Handbook Builder, which now includes premium features including the ability to customize it for every state you operate in and to translate it into Spanish. Learn more by attending a demo webinar on May 22 or 24.

Originally Published thinkhr.com

This year’s flu season is a rough one. Although the predominant strains of this year’s influenza viruses were represented in the vaccine, they mutated, which decreased the effectiveness of the immunization. The flu then spread widely and quickly, and in addition, the symptoms were severe and deadly. The U.S. Centers for Disease Control and Prevention (CDC) reported that the 2017 – 2018 flu season established new records for the percentage of outpatient visits related to flu symptoms and number of flu hospitalizations.

Younger, healthy adults were hit harder than is typical, which had impacts on the workplace. In fact, Challenger, Gray & Christmas, Inc. recently revised its estimates on the impact of this flu season on employers, raising the cost of lost productivity to over $21 billion, with roughly 25 million workers falling ill.

Fortunately, the CDC is reporting that it looks like this season is starting to peak, and while rates of infection are still high in most of the country, they are no longer rising and should start to drop. What can you do as an employer to keep your business running smoothly for the rest of this flu season and throughout the next one?

  1. Help sick employees stay home. Consider that sick employees worried about their pay, unfinished projects and deadlines, or compliance with the company attendance policy may feel they need to come to work even if they are sick. Do what you can to be compassionate and encourage them to stay home so they can get better as well as protect their co-workers from infection. In addition, make sure your sick leave policies are compliant with all local and state laws, and communicate them to your employees. Be clear with the expectation that sick employees not to report to work. For employees who feel well enough to work but may still be contagious, encourage them to work remotely if their job duties will allow. Be consistent in your application of your attendance and remote work rules.
  2. Know the law. Although the flu is generally not serious enough to require leaves of absence beyond what sick leave or PTO allow for, in a severe season, employees may need additional time off. Consider how the federal Family and Medical Leave Act (FMLA), state leave laws, and the Americans with Disabilities Act (ADA) may come into play for employees who have severe cases of the flu, complications, or family members who need care.
  3. Be flexible. During acute flu outbreaks, schools or daycare facilities may close, leaving parents without childcare. Employees may also need to be away from the workplace to provide care to sick children, partners, or parents. Examine your policies to see where you can provide flexibility. Look for opportunities to cross-train employees on each other’s essential duties so their work can continue while they are out.
  4. Keep it clean. Direct cleaning crews to thoroughly disinfect high-touch areas such as doorknobs, kitchen areas, and bathrooms nightly. Provide hand sanitizer in common areas and encourage frequent handwashing. Keep disinfecting wipes handy for staff to clean their personal work areas with.
  5. Limit exposure. Avoid non-essential in-person meetings and travel that can expose employees to the flu virus. Rely on technology such as video conferencing, Slack, Skype, or other platforms to bring people together virtually. Consider staggering work shifts if possible to limit the number of people in the workplace at one time.
  6. Focus on wellness. Offer free or low-cost flu shots in the workplace. If your company provides snacks or meals for employees, offer healthier options packed with nutrients.

Get it all

AGENCY RESOURCES: Get the latest weekly flu stats from the CDC. Learn more about how the FMLA and ADA may be used during pandemic flu from the U.S. Department of Labor.

By Rachel Sobel

Originally published by www.ThinkHR.com

In some of my previous blogs, the foundation of the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) continuation coverage was reviewed. Now that the groundwork has been laid, it is time to tread into the territories (or laws) where employers can lose their footing. The area covered in the following is that of the intersection of COBRA and the Family and Medical Leave Act of 1993 (FMLA).

The FMLA affects COBRA continuation coverage requirements. The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons for up to 12 weeks. The FMLA also protects employees, spouses, and dependents who are covered under a group health plan (GHP); those covered are entitled to the continuation of coverage while on leave on the same terms as if the employee was continuing to work.

Confusion may arise when FMLA and COBRA cross paths. A few problematic areas include determining when a qualifying event occurs, when calculating the maximum coverage period, and the consequences of an employee’s failure to pay their share of premiums during FMLA leave.

Qualifying Event

Typically, FMLA and COBRA intersect if an eligible employee does not return to work after exhausting his or her FMLA leave. While FMLA is not a COBRA qualifying event, a qualifying event could occur if the employee does not return to work or notifies the employer of his or her intent to not return to work at the end of the FMLA period. A qualifying event occurs if: (1) an employee or the spouse or a dependent child of the employee is covered under a GHP of the employee’s employer on the day before the first day of FMLA leave (or becomes covered during the FMLA leave); (2) the employee does not return to work at the end of the FMLA leave; and (3) the employee or the spouse or a dependent child of the employee would, in the absence of COBRA continuation coverage, lose coverage under the GHP before the end of the maximum coverage period. When it comes to the qualifying event of reduction in hours, the IRS specifically excludes FMLA leave from that category.

If the employer eliminates coverage under the GHP for the employee’s class of employees during the employee’s FMLA leave, then there is not a qualifying event. Any lapse of coverage under a GHP during FMLA leave is irrelevant in determining whether a set of circumstances constitutes a qualifying event or when a qualifying event occurs. Assuming the employer does not eliminate the GHP, the qualifying event occurs after the FMLA leave is exhausted and the employee does not return to work (or notifies the employer of the intent to not return to work).

Maximum Coverage Period

A qualifying event occurs on the last day of FMLA leave. The maximum coverage period is measured from the date of the qualifying event. If, however, coverage under the GHP is lost at a later date and the plan provides for the extension of the required periods, then the maximum coverage period is measured from the date when coverage is lost. For example, if the last day of FMLA leave is on the 21st of the month but the plan does not terminate coverage until the last day of the month, the last day of the month is the day of the qualifying event. The maximum coverage period is calculated from the last day of the month.

If state or local law requires coverage under a group health plan to be maintained during a leave of absence for a period longer than that required under FMLA (for example, 16 weeks of leave rather than for the 12 weeks required under FMLA), the longer period of time is disregarded for purposes of determining when a qualifying event occurs.

(Not) Paying Premiums

While on FMLA leave, the employee must continue to make any normal contributions to the cost of the premiums. Employers have a few options for handling payment of premiums during unpaid leave; the adopted policy should be documented in the employee handbook and discussed prior to the employee taking FMLA leave, if possible.

An employer’s trap arises if an employee does not pay his or her portion of the premium while out on unpaid FMLA leave. The employer may be tempted to discontinue coverage upon failure of the employee to pay their share. However, this is problematic if the employer cannot guarantee that the employee will be provided the same benefits on the same terms upon returning to work.

The employee’s failure to pay their share of the premiums while on FMLA leave does not create a COBRA qualifying event. Additionally, employers may not condition COBRA continuation coverage on whether the employee reimburses the employer for the premiums the employer paid while the employee was on FMLA leave. Moreover, it is not acceptable for an employer to increase the COBRA premium rate above 102 percent in order to recoup “past premiums due” when the employee was out on FMLA leave.

What happens if an employee experiences a COBRA qualifying event and elects COBRA, after which the employee takes FMLA leave, during which the employee fails to pay the COBRA premiums? Recall that the FMLA requires an employer to reinstate the employee to the same group health benefits after returning from FMLA leave. COBRA, however, is not a group health plan under FMLA. Consequently, an employee’s failure to pay COBRA premiums while on FMLA leave does allow the plan to terminate the employee’s coverage. (Remember, there may be grace periods for late payment or more generous state laws impacting the decision and time to terminate coverage. Be sure those timelines are followed and documented.)

While there is potential for the weary employer to misstep, the intersection of FMLA and COBRA can be handled, so long as it is with care and caution.

For an in-depth look at qualifying events that trigger COBRA, the ACA impact on COBRA, measurement and look-back issues, health FSA carryovers, and reporting on the coverage offered, request UBA’s ACA Advisor, “COBRA and the Affordable Care Act”.

Originally published by www.ubabenefits.com

I just want to let you know that YOU ARE AWESOME. You’re always on top of things and answer questions promptly and in detail. I love working with you."

- Office Operations Administrator, IT Consulting Firm

Categories