On January 6, 2023, the Massachusetts Department of Family and Medical Leave (DFML) published new Paid Family and Medical Leave (MAPFML) regulations (the 2023 Regulations). These regulations make changes to Section 458 CMR 2.16 and address the narrow issue of maintenance of a covered individual’s health insurance during MAPFML leave. For the most part, the 2023 Regulations track the draft changes we discussed in our earlier post.
Since 2021, the MAPFML has provided paid family and medical leave benefits to covered individuals in Massachusetts. In addition to financial payments, the MAPFML also secures certain job protection, anti-retaliation, appeal and health insurance maintenance rights for individuals who take MAPFML covered leave. We have posted about MAPFML benefits and leave rights at length in our prior posts, including posts covering 2022 developments, MAPFML regulations, and private plans.
New Regulations Expand Employer Options for Health Insurance Continuation During Leave
Before these recent changes, the MAPFML regulations provided that, “during the duration of an employee’s family or medical leave, the employer shall continue to provide for and contribute to the employee's employment-related health insurance benefits, if any, at the level and under the conditions that coverage would have been provided if the employee had continued working continuously for the duration of such leave.”
The 2023 Regulations expand an employer’s options for providing insurance during leave by making the following change: “during the duration of an employee’s family or medical leave, the employer shall continue to provide for, contribute to, or otherwise maintain the employee's employment-related health insurance benefits, if any, at the level and under the conditions that coverage would have been provided if the employee had continued working continuously for the duration of such leave.”
The 2023 Regulations also provide that “the provision ‘otherwise maintain’ shall be interpreted broadly to encompass any method of benefit maintenance or approximation of benefits that permits an employee taking family or medical leave to maintain access to health coverage for the duration of the leave on the same or equivalent terms, including the employee’s costs for such coverage, such as premium contributions, co-pays, and deductibles.”
The 2023 Regulations provide a number of non-exclusive examples:
- The employer may continue to pay its portion of a group insurance plan premium, with the employee remitting the employee’s portion in accordance with the employer's uniformly-applied policies or practices.
- The employer may reimburse the employee out of its general assets for a portion of COBRA or mini-COBRA coverage so that the amount the employee pays towards health insurance remains unchanged, until the employee can resume regular employer-sponsored coverage.
- Note: Employers should be mindful that COBRA and mini-COBRA are available only if the taking of leave is a COBRA-qualifying event. In particular, the taking of federal FMLA leave is not a COBRA-qualifying event unless and until the employee fails to return from FMLA leave. Employers should be mindful of FMLA rules if FMLA and MAPFML leave overlap.
- Additional examples apply to employers who are parties to collective bargaining agreements which provide for participation in multi-employer health plans.
The 2023 Regulations make clear that employers will not be required to provide for, contribute to, or otherwise maintain employment-related health insurance benefits for an employee who does not receive or is not eligible to receive such employment-related health insurance benefits when the employee’s family or medical leave begins. Nor, according to the 2023 Regulations, are employers required to provide for, contribute to, or otherwise maintain health insurance benefits for covered individuals who resign during a leave or are former employees when the covered individual’s family or medical leave commences.
While the changes in the 2023 Regulations offer some flexibility as to the employer’s requirement to maintain coverage, several issues remain:
- Most employers make changes to their medical benefits programs from year to year in the ordinary course of business. Employers routinely adjust premium contributions, co-pays, and deductibles, change plan design offerings (e.g. switch from low deductible to high deductible health plan arrangements, or offer a new range of options), change benefits, and sometimes change carriers altogether. What are an employer’s obligations to an individual entitled to health insurance maintenance who is on leave when these changes take effect? Similarly, may an employee who was not participating in the employer’s benefit plans at the start of MAPFML leave elect benefits for a new plan year beginning during MAPFML leave?
- Does “maintenance of health insurance” contemplate continuation of major medical coverage only? Or does the DFML intend that employers also offer maintenance of dental, vision, and other plans providing medical care beyond major medical coverage? Similarly, does the DFML require that employers make contributions towards health savings accounts?
- If MAPFML benefits are paid under a private plan, may the employer withhold medical plan premiums from benefit payments?
- If an employee fails to remit the employee’s share of premiums during leave, may the employer cancel coverage during the leave? If so, under what circumstances? Does the employer have any recourse for unpaid premiums?
- The 2023 Regulations make clear that employers may “otherwise maintain” coverage in a variety of ways, including but not limited to the examples given. While this flexibility is welcome, employers are advised to proceed with caution and consult with counsel when providing health coverage through any mechanism other than continued active employee coverage. For example, an employer who is considering providing an employee on leave with a cash payment in lieu of coverage should be mindful that such an approach could create issues under the Affordable Care Act. In addition, as noted above, COBRA or mini-COBRA may not be available under all circumstances.
The 2023 Regulations provide new options and flexibility for employers to meet the MAPFML requirement to provide health insurance coverage during leave. However, some questions remain, and employers are well advised to consult legal counsel and watch for further guidance in order to ensure compliance with MAPFML.