The Family Medical Leave Act of 1993 (FMLA) applies to employers with fifty (50) or more employees. It allows employees to take up to 12 weeks of unpaid family and medical leave per year and to continue to receive health benefits during the leave. Leave may be taken for the birth or adoption of a child or when children or family members are ill. The IRS clarified the coordination of FMLA with Flex Plans effective for plan years beginning in 2002. Key points are:
- An employer must continue to provide health benefits at the same level as if the employee had been working and must continue the same employer contribution, if any, toward the cost.
- An employer must either allow an employee on FMLA leave to revoke coverage or to continue coverage but discontinue payment of his share of contributions for the period of the FMLA leave.
- A plan may offer the options of pre-pay, pay-as-you-go, or catch-up. Pre-pay cannot be the only option offered. Some of these options may result in contributions being made after-taxes.
- An employee who revokes FSA coverage during FMLA leave can, upon returning, either resume coverage at the original level (by making up all missed contributions) or resume coverage at a reduced pro-rata level (by resuming contributions at the original level... the "proration rule").
- Those on FMLA leave at the time of plan reenrollment have the same rights as others to reenroll in the plan.
For those interested in technical detail:
- Here is the full release by IRS as published in the Federal Register on 10/17/2001. The article begins at the end of the first page. The most helpful portion may be the series of Questions and Answers that begins after the first page or two.
FMLA Regulations - Federal Register 10/17/2001
The rules on FMLA compliance can be quite technical. Please inquire for further discussion on applicability of FMLA to your Flex Plan.