There are a number of issues that may arise when an employee takes leave under the Family Medical Leave Act (“FMLA”) and the employee has a Health Flexible Spending Account (“Health FSA”). The FMLA requires an employer to continue health benefits for an employee while on leave. In addition, upon return from FMLA, an employee is permitted to reinstate health benefits, if they are ever terminated. This post addresses some common questions.
- Must the employer give the employee the option of continuing the Health FSA during FMLA leave?
- Yes, a health FSA is considered a group health plan and the employer must give the employee the option to continue coverage.
- May an employee revoke Health FSA participation while on FMLA leave?
- May an employer require the Health FSA coverage to continue?
- Yes, an employer may require the Health FSA coverage continue, but the employer must allow an employee to discontinue contributions.
- If the employer continues Health FSA coverage, the employer may recoup employee contributions when the employee returns to work.
- If an employee elects the catch-up payment option, must the full Health FSA limit be made available to the employee while on leave?
- If an employee revokes health FSA or fails to make contributions under a “pay-as-you-go” payment option, upon return, what is the amount the employee must contribute?
- An employee may elect to contribute the full amount selected prior to taking FMLA, which requires paying past amounts due.
- An employee may elect to contribute a pro-rated amount, which excludes missed payments.
- If an employee fails to make contributions while on leave and the Health FSA is terminated, is the employee eligible to receive reimbursements for expenses incurred while the Health FSA was inactive?
- No, an employee is not eligible for reimbursement. This holds true even if the employee makes full contributions under Question No. 5.
- Can an employer restrict Health FSA election changes for an employee on FMLA?
- It depends. If the employer restricts election changes for all employees, the employer may restrict Health FSA changes for an employee on FMLA leave. However, if an employer does not restrict election changes for all employees, it may not restrict election changes for an employee on FMLA leave.
For additional questions, speak to your USI Consultant.