Employee’s Failure to Pay Premiums Under FMLA Protected Leave

Last Updated on October 17, 2023 / Benefits & Compensation

HR Question:

An employee on FMLA protected leave of absence has stopped paying for their health insurance premiums. Is it safe to terminate their health coverage given the employee’s failure to pay premiums?

HR Answer:

If the employee is on FMLA protected leave, absent any written policy that provides a longer grace period, the regulations require an employee receive a 30-day grace period to pay for benefit premiums before health coverage can be terminated. In addition, employers are required to provide the employee a written notice at least 15 days prior to the end of the grace period informing the employee that benefits will be terminated if payment isn’t received. It’s recommended that the written notice be sent via certified mail and in an electronic format (if the employee has communicated via email in the past). Over Communication to understand the ramifications of the employee’s failure to pay premiums is beneficial.

Failure to pay when not on FMLA leave

If the employee is not on FMLA-protected leave – the existing policy, practice, or precedent for how similar situations have been handled (non-FMLA related leaves) should dictate how to proceed as practices should be consistent. For ease of administration, it may be beneficial to handle the non-payment of benefit premiums for non-FMLA protected leaves in the same fashion – even if doing so is more than is legally required.  

For someone who is not yet on a formal leave of absence but may be out due to medical reasons, a formal memo should be sent to the employee. The memo should outline the employee’s requirement to notify the employer of the reason behind their absence, documentation to support the need for a medical leave (if applicable), and what accommodations (if any) may be needed. The memo should also outline the employee’s responsibilities for payment of health insurance premiums. Once again, prior to terminating health insurance, the memo should be provided to the employee, a minimum of 15 days prior to terminating health coverage.

For additional information, the U.S. Department of Labor provides this guidance.  

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