Can employer recover health coverage costs if employee doesn't return from FMLA leave?


Melissa, an analyst in your marketing department, has been out on FMLA leave for 12 weeks. She said she was coming back to work but, at the last minute, called to say she will not be returning. Given that the company provided her with health coverage during her leave, can you recover the costs spent for that period?


Yes, but with a few exceptions. If an employee on FMLA leave fails to return to work after the leave expires or has been exhausted, the employer can try to recoup its cost of group health plan coverage for the unpaid portion, if any, of the FMLA leave period. For this purpose, "returning" means returning to work for at least 30 calendar days,

For self-insured plans, this amount is limited to the employer's share of allowable COBRA premiums, not including the 2-percent administrative fee. The health premiums that can be recovered are treated as a debt owed by the non-returning employee. The employer's responsibility to provide health coverage (and, for self-insured plans, to pay claims incurred) during the period of FMLA leave does not change.

Exceptions. No recoupment of the employer's cost for group health plan coverage during the leave is allowed if the employee fails to return to work due to:

(1) the employee's (or employee's family member's) continuation, recurrence, or onset of a serious health condition; or

(2) other circumstances beyond the employee's control.

In addition, the employer cannot recover its cost of group health plan coverage from certain key employees who are not reinstated following FMLA leave.

If the employee claims that he or she is unable to return to work because of a serious health condition affecting the employee or a family member, the employer can require a certification by a health care provider. If the employee does not provide the certification within 30 days of the employer's request, the employer may recover the health benefit contributions paid by it during the period of unpaid FMLA leave.

Examples of circumstances that qualify as "other circumstances beyond the employee's control" include a parent's choice to stay home with a newborn with a serious health condition; an unexpected transfer of an employee's spouse to a job location more than 75 miles from the employee's worksite; a need for the employee to provide care to a relative or other individual who is not an immediate family member who has a serious medical condition; or a layoff of the employee while on leave.

Permitted methods of recovery. If recovery of the cost of group health plan coverage is allowed, the employer may recover it by deducting its share of health insurance premiums from any sums owed to the employee, such as wages, vacation pay, or profit-sharing distributions, if such deductions are otherwise permitted under applicable federal or state wage payment laws or other laws. Employers also may commence legal action against the employee to recover such amounts.

Source: 29 U.S.C Sec. 2614(c)(2); Employee Benefits Management Newsletter, 622, November 15, 2016.

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