Health Insurance While on Leaves

“I have an employee who has been out on a leave of absence for several months. I want to take care of my employees and have them know I won’t just fire them if they have health issues (even though I’m not subject to the Family/Medical Leave Act). However, I don’t see an end in sight for this particular leave and it’s costing me money because I’m still paying for the employee’s health insurance. What are my options?”

My HR Survival Tip

It’s great you are trying to take care of your employees. I’m sure that has helped with employee retention. Be careful this level of “caring” is not becoming expected and you end up on the hook in the future. There are a few areas you need you need to consider:

  • Are you promising to keep their job open, even if it’s not legally required?
  • Are you prepared to offer the same extended leave to every employee?
  • Are you going to keep paying for insurance for the whole length of that leave?

Offering an extended leave or promising the job will be open to some employees but not all could be discriminatory, so you need to carefully consider just how far you can go. It’s easier to let the employee know you can’t hold their specific job open… but you hope to have something for them when they are able to work again. Even then, I’d put a timeline on it, such as “I can keep this job open for you for up to 60 days but, after that, we’ll have to see if there is anything available.”

Let’s focus on their absence not costing you as much money. Check your Employee Handbook policies to see what you have in there about the continuation of health insurance for leaves of absence. This is one of those times that your Handbook policy takes precedent. If it’s in your Handbook, you could let the employee know s/he will be offered COBRA after 30 or 60 days’ absence. On COBRA, the employee pays the full premium so you’d have no cost. Pregnancy leaves require 4 months of insurance continuation but all other leaves can have less.

You do have to be consistent and apply this to every employee who goes out on a leave of any type, including workers’ compensation. If you don’t have this policy in your Handbook, have a professional help you add it now. If you have people out on leaves, give at least 30 days’ notice of the policy change and get the COBRA paperwork to them.

Health insurance is costly and there is no legal reason you need to keep paying toward an employee’s premium who is not actively working for you. Don’t forget though, pregnancy leave is the exception!

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