Q&A: Duty to keep health insurance during workers’ comp is limited
Question: We have an employee out on leave to recover from a workplace injury. Are we supposed to keep her on our health insurance plan?
Answer: It depends on whether the employee’s leave is protected by federal or state leave laws in addition to workers’ compensation. State workers’ comp laws generally don’t require employers to maintain health insurance coverage while an employee is on leave. However, the federal Family and Medical Leave Act (FMLA) requires covered employers to continue health insurance benefits for eligible employees for up to 12 weeks on the same basis as if they had continued to work. A workers’ comp injury may be a “serious health condition” under the FMLA. Some states also require health insurance continuation during medical leave, while other states don’t. For example, California requires continuation of health insurance during leaves covered by the California Family Rights Act (CFRA), similar to FMLA. The Oregon Family Leave Act (OFLA) also requires continuation of health insurance similar to FMLA, but there’s an additional wrinkle: OFLA doesn’t apply to employees on leave for work-related injuries unless they refuse a bona fide offer of modified duty. Idaho, Montana, and Washington don’t impose any requirements for continuing health insurance during leave.
Many employer health insurance plans don’t allow you to keep an employee on the plan during extended leave, unless insurance continuation is legally required. It’s important to check the terms of your specific plan for coverage during a leave of absence. Keeping an employee on the company’s health insurance when the employee is no longer eligible may result in denial of the employee’s insurance claims, which may trigger legal action against the company by both the employee and the insurance carrier. On the other hand, terminating health insurance too early or without following the proper procedures can also result in liability.
For more information on the interaction between worker’s compensation, FMLA, and health insurance continuation rights under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA), see our Legal Guides, “FMLA and Workers’ Compensation Overlap” (1713), and “FMLA: Medical Coverage Continuation and COBRA Overlap” (2091), or check with your Vigilant employment attorney.
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