Benefits while on Long-term disability

Tricia

This question is for smaller organizations, especially manufacturing.

Due to a recent problem with an employee who has been on an extended leave (6 mos), the president of our company would like me to research a possible way of having the employee pay for his benefits while he is out on leave.

He suggests: While an employee is out on FMLA, we will pay for the employee's benefits. This consists of paying a portion of the insurance premiums (we do require a person on leave to pay their part of the premium while on FMLA), life insurance premiums, std & ltd (co. pays in full). If needed, we would be willing to offer a 30 day extension to the employee once FMLA has exhausted. After this 30 day period, if the employee needed to remain out of work, the employee could request an extension. Management would decide whether or not to grant this extension. The president would like to find out if there is any way that once an employee is out on a leave extension, can we require that the employee pay for his/her benefits (full costs)? This would mean that the employee would pay for his/her health insurance costs in full as well as his/her life insurance premium (minimal costs). Our LTD policy has a clause where we will not be charged for the LTD costs once the employee starts filing a claim.

I would like anyone's thoughts on this matter and also if it is even legal?

Again, we are a small company and cannot afford to continue to pay for benefits for employees who may be out on leave indefinitely.

Also, if you are able to answer when is an appropriate cut-off time. How long do you have to keep this employee on payroll and provide benefits before you say enough is enough. We don't want to be the "big bad wolf" here; just want to protect our interests as a company. We also need to seek some finality so that we are able to permanently replace this employee when we finally realize that he/she may not be returning.

Thank you for your help!

System

Hi Tricia

I also work at a small private manufacturing plant in Boynton Beach, FL. I would say first of all that if you don't already have a leave of absence policy in writing, that would be the first step to take. After setting one up, whatever rules your company makes regarding personal leaves of absence, as long as they don't conflict with federal/state law, such as FMLA or ADA, with regards to benefit continuation and/or job reinstatement, you should be able to apply your chosen policy consistently to all employees, without any problems.

Our policy is basically that we allow unpaid, personal leaves of absences(not related to medical problems or FMLA) for employees ranging in time from as little as 5 days to 180 days, subject to management approval. For a personal leave of absence, not related to medical reasons or to FMLA, the employee is unpaid, plus responsible for full payment of health, life and any other voluntary insurances they have. The payment would begin after 30 days, and the health would be administered under COBRA, so we would give them or mail them their cobra papers and it would be up to them to elect or reject that offer. We clearly let them know in writing that failure to provide the appropriate premiums will result in lapse of coverages. Concerning reinstatment to active work from a personal loa, we state in our policy that the position must be available, and the individual must be the most appropriate applicant for the job. We also have in writing that if the person does not return from a personal loa after 26 weeks/6 months, they are automatically terminated. Of course if they contact us prior to that and have a very good reason to extend it in any way, an exception might be made, but we have not had to make any exceptions so far, so consistency has been maintained so far.

Now if they are out on FMLA for medical reasons for the employee, then we run the FMLA concurrently with our own company short term disability program, which is a 26 week program where we pay the employee 50% of their pay, and they still pay their portion of insurances, but again, after the 26 weeks, if they don't return, they are terminated. But basically after the 3 months of FMLA is met, if they still have to be out for their own health problems, we do allow another 3 months off with half pay, plus benefits, but after those are up, that's it, termination follows, and COBRA after that.

Hope this answered your question. If you want me to fax you a copy of our company policy just give me your fax number and I'll be happy to do it.

Ana

HRTak

This is similar to my situation...except my employee is out on a WC injury for 6 mo now and I don't know what to do about her premiums as well and how long to keep her on the insurance. Have you had any luck yet? Lets talk.

System

We have two employees out on workers comp for almost a year now....and the way we've always done it with w.c. is we pay for their portion of the health plan, life insurance, and they are responsible for voluntary insurances such as ltd and term life. The reason we do that is because as long as the carrier is paying them w.c. benefits anyway, if we stopped the health, we would have to report that to our carrier and they would increase the benefit payments to the employee, so we end up paying either way, so we choose to do it this way, which cuts out big headaches for us with regards to late premium payments, etc.

Ana

Amyl

I have a problem related to this topic. We are a larger company (5000 employees). We have a policy that a person may be on medical leave for as long as up to 2 years, at which point we review the situation and if appropriate, terminate them. We have an individual on long term disability. Typically, we keep them on medical benefits at the normal cost (i.e., it's not COBRA). The carrier is telling us that since this employee is not "active" their contract w/us requires them to take them off the benefits plan. Our options at this point seem to be (1) trying to move him onto another plan that allows continued coverage; or (2) telling him to start COBRA -- which begins his 29 months now instead of at the end of the 2 years -- we'd probably pay the cost during the LTD. Any other possibilities? This employee is located in California.