Healthcare Benefits and Workers' Comp
Lisa TBM
14 Posts
Does anyone else have this issue and would you be willing to share your thoughts???
I am HR Director for a NYS PEO. (Professional Employer Organization) Normally when an ee is out on WC we will continue to bill the worksite employer for the employer portion of the healthcare premium on a weekly basis with payroll. The problem is that we do not get the employee portion because they are not receving a check. More often than not, the ee returns to work within a reasonable amount of time and we are able to make up their deductions and everything is square. What I would like to do with these ee's is to immediately send them a COBRA letter when they go out on comp. In my mind they are not eligible for the group plan if they are not working their 30 hours (our contractual agreement with the carriers)I am not a WC specialst by any means and do not know the "rules". CEO says "send it" and let them deal with it why should we bear the expense....I agree to a point, however are the ee's protected by any specific WC law rules etc... that forces us as the employer to keep their benefits active even if we do not have their premium? I would appreciate your input.
I am HR Director for a NYS PEO. (Professional Employer Organization) Normally when an ee is out on WC we will continue to bill the worksite employer for the employer portion of the healthcare premium on a weekly basis with payroll. The problem is that we do not get the employee portion because they are not receving a check. More often than not, the ee returns to work within a reasonable amount of time and we are able to make up their deductions and everything is square. What I would like to do with these ee's is to immediately send them a COBRA letter when they go out on comp. In my mind they are not eligible for the group plan if they are not working their 30 hours (our contractual agreement with the carriers)I am not a WC specialst by any means and do not know the "rules". CEO says "send it" and let them deal with it why should we bear the expense....I agree to a point, however are the ee's protected by any specific WC law rules etc... that forces us as the employer to keep their benefits active even if we do not have their premium? I would appreciate your input.
Comments
I think to answer your question, it depends on how you view the ee while on leave. If the ee is still viewed active, I would not send the COBRA notice. However, you can require that the ee pay the premium when it is due, and if they do not make the payment, then you could term benefits and offer COBRA. If they are inactive when on leave, I believe I would send offer COBRA. To me, it is easier to treat them as active, until determined that the ee is unable to return, because of the time to get them back on the plan when they return. If they do not return, then follow the normal guidelines for providing the proper COBRA notice.
I, too, work for a PEO. We require all employee's on leave, including FMLA, to maintain their premium payments for medical coverage while on leave. We outline that in the employee handbook that is provided to each employee, and basically say they must right a check to the company for the amount they owe at the beginning of each month. I also recommend that you designate workers comp as FMLA whenever it qualifies as such, and as others have already pointed out, you designate it, don't wait for the employee to request it. Don't terminate anyone for failure to pay premiums, just discontinue the applicable coverages. Keep the employee active until the comp issue is resolved, and if they fail to return to work, stipulate in your FMLA policy that failure to return from FMLA will result in the employee being required to pay the employer portion of the premium as well that was paid in their behalf while on FMLA. (but good luck trying to collect. We have about a 20% success rate collecting such, but better than nothing).
Can you clarify "don't terminate anyone for failure to pay premiums" you mean terminate their employment???? or terminate their Healthcare benefits??? We would never terminate employment while ee is on leave, especially WC and dbl.... however the whole reason why I started this post was to find out if there were ramifications for terminating the healthcare of those who are out on WC if they don't pay the premiums. We don't want to get stuck with the bill. Our carriers give us about 60 days for retro terms.. we try to keep that window of opportunity open so not to get stuck. Thanks again.
If the guy meets FML eligibility, you are jumping the gun by sending out the COBRA notice. It is up to the company to designate the leave as FML. If you know or should have known that the medical situation is likely to qualify for FML protection, then sending the guy a COBRA notice could get you into HOT water.
You must jump through the hoops, IMO. First, designate the leave as contingent FML. Second, send the guy the FML paperwork (medical certification) and start the 15 day clock for him to return the paperwork.
You might already have enough information to know this is FML, so the medical certification may only add to this certainty.
FML regs require you to maintain health insurance just as if the EE is working. That means when he does not pay his portion, you can start the process that terminates health insurance. There are some notice provisions and time lines around this cancellation process - you must go through them.
Assuming the guy does not maintain health insurance, then you can cancel. By the way, I do not think this is a COBRA event since the guy is still working and protected for the FML 12 weeks.
If the guy is able to return in 12 weeks, then he can be reinstated on the group plan. Discuss this with your carrier, there are some detail they will be well versed in.
As to billing the worksite ER, as long as the EE can catch up on the premiums, that is OK, but if there is a retroactive cancellation, you probably owe them a credit.
"FML regs require you to maintain health insurance just as if the EE is working. That means when he does not pay his portion, you can start the process that terminates health insurance."
Why would failing to pay the ee portion of benefits not be a reason to offer COBRA? If the ee does not make the payments they are responsible for, just as if they were actively working, it is okay to terminate coverage. But I don't see why you could not offer COBRA, since they would not longer be covered under the plan? For my own curiosity, why would you get in HOT water for giving the ee an option to continue coverage under COBRA? I may answer my own question, but is it not appropriate to offer COBRA since the ee is still technically employed, although not performing work (assuming it is not intermittent)?
Would you allow the ee to renew coverage if they were able to pay the premiums that they missed to keep their insurance?
The non-payment of premium during FML is not a qualifying event. I actually learned that from my participation on the forum. Back in September 04, mushroomHR authored a thread that brought up the subject. I did a quick search and copied what I think is the summarizing post from that thread:
"I've got the answer. This is from a COBRA publication faxed to me by a COBRA administrator:
"Q. Does an employee's failure to pay group health plan premiums while on FMLA leave affect COBRA rights?
A. COBRA rights are not affected if an employee fails to pay the employee portion of premiums for coverage under a group health plan during FMLA leave. Any lapse of coverage under a group health plan during FMLA leave is irrelevant in determining whether circumstances constitute a COBRA event, according to the Internal Revenue Service. And if the employer paid the employee's health plan premiums during the leave period, COBRA coverage may not be conditioned on reimbursement of those premiums.
Loss of coverage due to nonpayment of premiums during FMLA leave is not a COBRA qualifying event and is disregarded for COBRA purposes."
This issue has never been addressed in the many FMLA/COBRA seminars I have attended. They've only said you can discontinue coverage for non payment of premiums. That's as far as they've gone on the subject."
From the DOL site:
[url]http://www.dol.gov./esa/regs/compliance/whd/1421.htm#2i[/url]
Where appropriate, arrangements will need to be made for employees taking unpaid FMLA leave to pay their share of health insurance premiums. For example, if the group health plan involves co-payments by the employer and the employee, an employee on unpaid FMLA leave must make arrangements to pay his or her normal portion of the insurance premiums to maintain insurance coverage, as must the employer. Such payments may be made under any arrangement voluntarily agreed to by the employer and employee.
An employer's obligation to maintain health benefits under FMLA stops if and when an employee informs the employer of an intent not to return to work at the end of the leave period, or if the employee fails to return to work when the FMLA leave entitlement is exhausted. The employer's obligation also stops if the employee's premium payment is more than 30 days late and the employer has given the employee written notice at least 15 days in advance advising that coverage will cease if payment is not received.
With the above information, further input in the thread reveals that cancellation because the EE does not intend to return or because the EE does not return can be considered a qualifying event.
It gets a bit more complicated if you cancelled coverage during FML because of non-payment after 30 days, but the EE continues on FML leave. At the end of the FML or if the EE subsequently decides not to return - the COBRA becomes moot because the EE is not participating in the group health plan.
The reason I said the COBRA notice can cause problems is that it could be interpreted by the EE, that you have terminated the EEs employment, since that is a COBRA qualifying event that triggers the notice - and termination during FML is obviously a no-no and could cause an immediate call from the EEs attorney.
edited to add the DOL site information.