Human Resource Blog

Disability and Health Insurance Payments

We are a company of roughly 85 employees. We have an employee who is going out on disability for her pregnancy/delivery. Because she has not worked for us for 12 months she does not qualify for FMLA. She does have a disability policy with us but here is my question.

Our company pays 100% of the health insurance premium but if she goes on disability, isn’t she required to pay 100% of the health insurance through COBRA? In other words, are we required by law to continue paying 100% for her health insurance if she is not actively working and in fact is out on disability?

While we would love to cover her health insurance costs, the problem is that we will set a precedent and that could become a problem for us in the future.

Pamela H.

Human Resource Manger

You are correct that any benefits you offer this employee will set a precedent. You may be required to treat other pregnant or medically disabled employees in the same way, in the future.

You could legally terminate this employee. It would then be your choice to rehire her when she is able to work. (Assuming that the disability benefits are through an insurance policy, she would still qualify for disability as long as she continued to pay the premiums.) A short term disability insurance program is unrelated to job security.

If the employee is terminated, she may very well qualify for the 65% COBRA premium reduction (also called the COBRA subsidy) since she is unemployed through no fault of her own. 

Even if you choose to offer this employee unpaid leave, and return her to her job eventually, you are under no legal obligation to continue her health insurance premiums — and we agree that you should not. She would qualify for COBRA due to working less than the minimum number of hours to retain group insurance coverage. However, because she is still employed, she would not qualify for the COBRA premium reduction.

Obviously, this answer would be different if the employee was covered by FMLA or a state family leave law.