Key Considerations for Employers of all Sizes: Leave of Absence Policies

Many employers recognize the importance of offering their employees extended leaves and may want to offer leave policies that are more generous than the FMLA or state-mandated leave policies that may apply to them. However, employers should make sure that if they want benefits to stay active during extended leave periods, that their carrier/TPA/stop-loss provider is aware of the policy. Some carriers of fully insured plans may require a minimum number of hours to be worked (outside of federal or state-mandated leaves) for coverage to remain active. Stop-loss providers will not cover claims for non-eligible employees that were not specifically provided for in the stop-loss contract.

Extended leave also impacts the timeframe for when a non-active employee experiences a COBRA-qualifying event. Having any ineligible employees on the plan is a potential liability for the employer for any claims and medical expenses incurred during the ineligible period and raises potential ERISA fiduciary concerns. Employers should make sure leaves of absence are properly documented and have the appropriate sign-off from all necessary vendors.