Workers’ Comp: Ways to Protect Employee’s Health Benefits

We have an employee who has been on workers’ compensation leave for a few months. How long do we have to continue to pay for his health insurance?

This issue was decided in 2002, yet the question continues to come up. California Labor Code Section 132a makes it clear that employers may not discriminate against an employee who has filed a workers’ compensation claim, and until 2002, discontinuing an employee’s health benefits was considered such a form of discrimination under that code section.

Workers’ Comp Ruling

In 2002, however, the entire panel of workers’ compensation judges decided in the case of Navarro v. A&A Farming that the Employee Retirement Income Security Act (ERISA), the federal body of law that governs health benefit plans, preempted the state law.

The panel also held that when an employee goes out on workers’ compensation leave, it is a reduction in hours that triggers continuation coverage requirements of the Consolidated Omnibus Budget Reconciliation Act (COBRA).

This means that workers’ compensation does not protect an employee’s health benefit plan.

Family/Disability Leaves

If your 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), you can place the employee on family leave running concurrently with workers’ compensation leave, and that will protect the employee’s benefits for 12 weeks as long as your plan is ERISA qualified.

Some employees don’t want to be placed on FMLA or CFRA, intending to use those leaves for another reason later in the year. It is the employer, however, who makes the decision and places the qualifying employee on whichever leave is appropriate.

Keep in mind also that if the employee doesn’t qualify for family leave, their being out on workers’ compensation leave is a reduction in hours triggering COBRA.

If the injured employee does qualify for family leave but requires workers’ compensation leave for longer than 12 weeks, then the continuation of benefits under family leave expires, and the employer is required to send a timely notice of COBRA rights.

Many employers are under the misconception that if an employee is disabled, health benefits cannot be discontinued. Those benefits, however, are protected only by state and federal family leave and pregnancy disability leave laws.

Dana Leisinger, HR Adviser, CalChamber

CalChamber members can read more about Benefits During Workers’ Compensation in the HR Library. Not a member? See what a CalChamber membership can do for you.

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