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When employees take extended leave, HR professionals must navigate overlapping responsibilities under the Affordable Care Act (ACA), the Family and Medical Leave Act (FMLA), and employer-sponsored benefit plans. Managing health coverage during these leaves involves careful attention to both legal obligations and operational processes.
Under FMLA, employers must maintain group health plan coverage on the same terms as if the employee were actively working. That means continuing the employer’s share of premiums and allowing the employee to pay their usual contribution. This protection ensures employees retain access to healthcare during FMLA leave, even when it is unpaid. However, the ACA adds another layer of complexity, particularly when it comes to determining whether an employee is still considered full-time and thus entitled to an offer of coverage.
How an employer defines ACA full-time status, either using the monthly measurement method or the look-back method, affects how coverage is handled during a leave. For employers using the monthly method, unpaid FMLA leave can cause an employee’s hours to fall below the 30-hour threshold in a given month, potentially affecting eligibility. Under the look-back method, however, employees on FMLA leave must be credited with hours they would have worked, ensuring their status is not negatively impacted during the measurement or stability period.
Non-FMLA leave, such as personal or medical leave that falls outside FMLA protections, presents different challenges. Employers are not required to maintain coverage under non-FMLA leave, and the ACA does not require hours to be credited during these absences. Under the monthly method, this may result in a loss of eligibility. Under the look-back method, non-FMLA leave is generally counted as zero hours, which may lower an employee’s average hours and affect their future eligibility when a new measurement period begins.
Paid leave, whether under FMLA or not, is generally more straightforward. Hours of service typically count during paid time off, including vacation, sick leave, and paid disability leave, as long as the payments are made by or through the employer. In these cases, the employee’s ACA status is less likely to be disrupted.
A common challenge during unpaid leave is collecting the employee’s share of premiums. FMLA allows employers to use one of three methods: prepayment before the leave begins, catch-up payments after return, or paying on the same schedule using alternative arrangements. Employers should have consistent policies in place and communicate these options clearly to employees. For non-FMLA leaves, similar premium collection concerns exist, but without a regulatory framework, employers must define their own process and ensure it is applied consistently.
Coverage reinstatement following a leave requires careful handling. If coverage was terminated during FMLA due to non-payment of premiums, it must be restored without a new waiting period once the employee returns. For non-FMLA leave, the employee’s eligibility upon return depends on whether they meet the ACA full-time definition. Under the look-back method, employees may retain their status during a stability period and must be offered coverage immediately upon return. Under the monthly method, eligibility must be reassessed.
To manage these requirements effectively, HR should coordinate closely with payroll, benefits administrators, and leave managers. Many compliance errors occur not because of misunderstanding the rules, but due to poor internal communication. Having clearly documented policies, tracking systems for leave and coverage changes, and consistent procedures across departments can prevent gaps and ensure timely reinstatement.
Managing ACA compliance during leaves of absence requires a blend of legal understanding, operational readiness, and empathetic employee communication. By planning ahead and coordinating across departments, HR can ensure that coverage is managed smoothly, minimizing risk while supporting employees during some of life’s most challenging moments.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
