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FAQ: If an employee declines coverage while on FMLA leave, and does not return to work, is that employee entitled to COBRA? If so, then when does the COBRA maximum coverage period begin?

October 26, 2021

There are three things that must happen in order for a COBRA qualifying event to occur under these circumstances. First, the employee must have been covered under the employer’s group health plan on the day before the first day of the FMLA leave. Second, the employee does not return to employment with the employer at the end of the FMLA leave. Finally, in the absence of COBRA coverage, the employee would lose coverage under the group health plan before the end of the maximum coverage period when they fail to return to work.

In most cases, the COBRA maximum coverage period will begin on the last day of the period of leave to which the employee is entitled. The maximum coverage period may begin earlier if the employee notifies the employer that they are not returning to work. Any lapse of coverage under a group health plan during the FMLA leave, either due to the failure to pay premiums or due to the employee’s choice, is not considered when determining when the maximum coverage period begins.

For example, Wiley is covered under Acme, Inc.’s group health plan on July 15, 2021. Wiley takes FMLA leave beginning July 16, 2021, and declines group coverage for the duration of the leave. On August 28, 2021, Wiley tells Acme that he will not be returning to work. According to FMLA regulations, his last day of FMLA leave is August 28, 2021. Accordingly, Wiley experiences a qualifying event on August 28, 2021, and the maximum coverage period (which is generally 18 months) begins on that date.

Note that the COBRA election notice must be “furnished” (i.e., as of the date of mailing, if mailed by first class mail, certified mail or Express Mail; or as of the date of electronic transmission, if transmitted electronically) within 14 days after receipt of notice of the qualifying event (or 44 days after the qualifying event, if the employer is also the plan administrator, for qualifying events requiring notice from the employer to the plan). Since the failure to return to work after FMLA leave is a qualifying event that triggers an offer of coverage under COBRA, the notice should be furnished within 14 days (or 44 days) from either the last day of the FMLA leave, or the date the employer is informed that the employee will not return to work.

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