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Collecting past due payroll deductions

AN employee is set up to have payroll deductions each week for flex medical plan. The employee went out on FMLa towards the last part of the year. Can we bill them for the 2012 amount still owed to the employer? THe employer has already paid the amount.

The U.S. Department of Labor states that “an employer’s obligation to maintain health benefits under FMLA stops if the employee’s premium payment is more than 30 days late and the employer has given the employee written notice at least 15 days in advance advising that coverage will cease if payment is not received.

Typically, an employee on FMLA may have STD or sick benefits which their deductions may continue to be taken. An agreement is usually made with the employee at the time of the leave for payments or re-payments if the leave is unpaid by the following three methods:

· An employee can pre-pay contributions during their leave

· An employee can pay as they go such as payroll deductions or a check (employer billing),

· Employees can catch-up if the employer agrees to advance payments with the understanding the employee will be responsible for making catch up contributions.

However, in the event the employee does not pay their portion of the premiums, the employer is allowed to recover only the employee’s share of premiums it paid to maintain other “non-health” benefits during unpaid FMLA leave.

Specifically in regard to FSA dependent accounts while on FMLA. Employees may continue contributions for dependent care expenses under an FSA while on FMLA leave. However the employee needs to be gainfully employed or seeking work for dependent care expenses to be paid. There is a safe harbor provision for Short term temporary absences that do not exceed two weeks, but there is not a safe harbor provision for longer term illnesses covered under FMLA.

In regard to health care flexible spending accounts, an employer must either allow an employee on unpaid FMLA to revoke coverage, or continue coverage but allow the employee to discontinue payment of their share for the period of FMLA leave. FMLA allows the employer to recover the employee’s share of the premiums when the employee returns to work. In addition the employee cannot claim expenses if the FSA is terminated.

This entry was posted on Monday, January 14th, 2013 at 1:39 pm and is filed under
Human Resources Management.
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