Thursday, July 14, 2016

When COBRA and workers’ comp collide


Every now and again I get a question from a client to which I don’t know the answer, or the answer surprises me. It doesn’t happen that often, and when it does I’m man enough to admit it.

Yesterday I received just such a question. Must an employer continue the health insurance of an employee out of work with a workers’ compensation injury?

The answer? It depends. (Did you expect anything else?)

If facing this issue, ask yourself these two questions.

1. Is the employee on an FMLA or other statutorily approved leave of absence, which protects the employee’s health insurance?

Under the FMLA, if you provide an employee group health insurance, the employee is entitled to the continuation of such coverage during the FMLA leave on the same terms as if he or she had continued to work (including family coverage), provided that the employee continues to make his or her normal contributions to the premiums. So, in this case, follow the FMLA and continue coverage.

2. What does the plan say?

If the employer is not FMLA-covered, the employee is not FMLA-eligible, or the employee has exhausted available FMLA leave, then the employer will need to review the plan to determine coverage during a workers’ comp leave. Most plans have minimum-hours-worked requirements (i.e., “An employee needs to work __ hours during a week to be eligible for coverage.”). If that is the case, the workers’ comp leave will leave the employee working zero hours, rendering them ineligible for coverage. You will then issue a COBRA notice to the employee, since a “reduction of hours of the covered employee’s employment” is a “qualifying event” under COBRA. Otherwise, if your plan’s eligibility requirement permits coverage during a workers’ comp leave of absence, then follow the plan and continue covering the employee.

In the event coverage terminates, you can assure the employee that you are not engaging in sweep-the-leg tactics by leaving the work-related injury uninsured. Workers’ comp should continue to cover the injury-related medical expenses.

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