Insurance and Other Benefits During and After FMLA Leave

The federal Family and Medical Leave Act (FMLA) gives eligible employees the right to take time off work for certain qualifying reasons, including bonding with a new child, recovering from a serious health condition, or caring for a family member with a serious health condition. (For more information on the FMLA, including employee eligibility and qualifying reasons for leave, see our Family and Medical Leave page.)

FMLA leave is unpaid, which critics claim makes it less useful than it could be to many employees. However, the law does allow employees to take time off for important obligations, without worrying about losing their jobs. And, it provides an important financial advantage: It requires employers to continue employee health benefits during leave.

Which Benefits Continue During FMLA Leave?

The rules for continuing coverage during FMLA leave depend on the type of benefit.

Health Benefits

Employers must continue an employee's insurance coverage under the company's group health plan during FMLA leave, just as if the employee had been working continuously rather than out on leave. A group health plan means any plan created or contributed to by an employer to provide health care to employees, former employees, and their families. It includes self-insured plans, vision plans, dental coverage, and other health care plans, whether they are components of a single health care plan or administered separately.

Other Types of Benefits

For other types of benefits, employers must follow their usual policies for employees on leave. If an employer's policies do not provide for other benefits to continue or accrue during leave, it does not have to continue them or allow them to accrue during FMLA leave.

There is a caveat, however: Employees are entitled to restoration of benefits when they return from FMLA leave, with no waiting period or requalification requirement. Even if an employer doesn't usually continue, for example, life insurance while employees are on unpaid leave, it might have to continue that benefit for an employee on FMLA leave, if a gap in coverage would require the employee to requalify for insurance. An employer who has to continue an employee's benefits for this reason can recover the employee's share of the premium from the employee after he or she returns to work.

Like other benefits, retirement benefits must be restored at the same level when an employee returns from leave. FMLA leave does not have to be counted as hours worked or "time in service" for purposes of vesting, benefit accrual, or eligibility. However, FMLA leave cannot be treated as a break in service for purposes of retirement plans. And, if a retirement benefit requires an employee to be "employed" on a certain date to be credited with a year of service for vesting, contributions, or participation in the plan, and employee who is on FMLA leave is considered to be "employed" during that time.

Who Pays for Benefits?

For benefits that continue during FMLA leave, employees must continue to pay their share of the premium, if any. Employers must also continue to pay their usual share. Unless an employee is using paid time off (such as vacation time under the employer's policies) during FMLA leave, there will be no paycheck for the employer to withhold from. Your employer should tell you how to pay your portion: Many employers simply ask employees to write a check for their share and send it in on the regular payday.

If an employer chooses to continue other benefits (such as life or disability insurance) during FMLA leave, the same rules apply. Employees can be asked to pay any share of the premium they would have to pay if still working.

Restoration of Benefits

As noted above, employers are required to restore employee benefits when employees return from leave. Benefits must be restored at the same levels, unless any changes that affect the whole work force took place while the employee was off work. The employee is entitled only to be treated as if he or she had been working continuously during leave. If, for example, premiums increase, the employee will be subject to those higher prices.

If You Don't Return to Work

Some employees don't go back to work when their FMLA leave is over. In this situation, the company may have the right to seek reimbursement for its share of your medical insurance during FMLA leave.

However, the company has this right only if you chose not to return to work. If, for example, you were too ill to return to work, you couldn't return to work because you had to continue providing care for a family member, or you were otherwise unable to return to work for reasons beyond your control, your employer can't ask you to reimburse these costs.