The answer will depend on the reason the employee took leave and whether the leave is for a medical reason or not. HIPAA prohibits discrimination based on a health factor. Before HIPAA was implemented, many plans had provisions stating that employees had to be actively-at-work on the day their coverage would otherwise begin. However, one of the implications of HIPAA is that any plan that has an actively-at-work clause must treat an employee who is absent because of a health issue as being at work.
This would mean that medical-related leave taken during an employee’s waiting period does not impact the coverage effective date. If the waiting period requires satisfaction of a specific number of days or a specific time period, absence due to a medical condition would be counted toward the days needed for the employee to meet the waiting period.
Consider the following example:
An employee begins work on October 1, and the employer has a waiting period that states coverage begins on the first day of the month following the date of hire. Therefore, coverage under the plan would become effective on November 1. On October 20, the employee takes leave to have surgery and is unable to return to work until November 12. Because the employee was out for a medical reason, the employee’s leave is disregarded for waiting period and effective date purposes. The employee would be eligible to begin coverage on November 1, even while out on leave. Employers need to ensure they understand the rules so they do not inadvertently delay offering coverage to the employee.
If the reason for leave is not medical-related, the plan terms will dictate whether the employee has met their waiting period requirement and is eligible to begin coverage. An example would be an employee who takes a pre-planned vacation the week that the employee would have otherwise satisfied the plan’s waiting period. If there is an actively-at-work clause, then an employee taking nonmedical leave may not be eligible to begin coverage if they take leave during their waiting period or on the first day that coverage should be effective. Instead, eligibility would commence when the employee returned to work.
Employers should ensure that they have a clear policy in place to consistently enforce these rules, depending on the type of leave in question. Employers have an obligation to follow the terms of the plan and should communicate clearly to employees who may be on a leave of absence that corresponds with a benefit waiting period.