04.21.2021 | Newsletters

A recurring problem … Handling employee portions of insurance premiums for employees on leave

Employee records

Clients frequently call with problems arising because they have paid the whole portion of an employee’s health insurance premiums while the employee was on leave. While the requirements for different types of leaves of absence vary, in general, employees on leave are required to continue to pay any portion of their insurance premiums that they paid prior to the leave.

Frequently, however, employers fail to give proper notice of the requirements or just continue to pay the premium to the insurer even though the employee is not paying his or her share. Employers are reluctant to have employee benefits cut off for fear of a retaliation claim. This is understandable, and employers should always exercise caution in all actions regarding employees on a protected leave.

However, that does not mean employers have no remedies. For example, if an employee is on a California Family Rights Act (CFRA) leave, the regulations provide that, “Unless an employer policy provides a longer grace period, an employer’s obligation to maintain health benefits coverage ceases under CFRA if an employee’s premium payment is more than 30 days late. In order to drop coverage, an employer must provide written notice at least 15 days before coverage is to cease, advising that coverage will be dropped on a specified date at least 15 days after the date of the written notice unless payment has been received by that date.” (2 CCR section 11092(d)(3).)

It is imperative to follow the requirements for providing the employee instructions on paying his or her premiums at the beginning of the CFRA leave before taking these steps and ensure that you have managed the leave properly. If done correctly, there is no need for employers to be left “holding the bag” for the employee’s share of premiums.

Related practice team: Labor and Employment

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