When an employee is absent due to a workplace injury and receiving workers’ compensation benefits, their health insurance is not covered by workers’ compensation. However, there are options available to protect an employee’s health benefits. If the employee qualifies for the federal Family and Medical Leave Act (FMLA) or state leaves such as the California Family Rights Act (CFRA) or pregnancy disability leave (PDL), the employer can place the employee on family leave concurrently with workers’ compensation. This will protect the employee’s benefits for up to 12 weeks, if the plan is Employee Retirement Income Security Act (ERISA) qualified, such as a Western Growers Assurance Trust health benefits plan.
In some cases, an employee may not wish to be placed on FMLA or CFRA if they plan to use those leaves for another reason later in the year. However, in such cases it is up to the employer to make the decision to place the qualifying employee on the appropriate leave.
It’s important to note that if the employee doesn’t qualify for family leave, being out of work on workers’ compensation leave is considered a reduction in hours triggering the Consolidated Omnibus Budget Reconciliation Act (COBRA) requirements.
If the injured employee qualifies for family leave but requires workers’ compensation benefits for longer than 12 weeks, the continuation of benefits under family leave will expire. In this case, the employer is required to send a timely notice of COBRA rights to the employee. If the employee chooses not to elect COBRA, the employer could be on the hook for any payments the health plan made during the ineligibility period if they failed to remove the employee from the group health plan.
It’s a common misconception that if an employee is disabled, their health benefits cannot be discontinued. However, these benefits are protected only by state and federal family leave and pregnancy disability leave laws. Employers should be aware of these laws and take appropriate measures to protect their employees’ health benefits.