Long Term Disability and Health Insurance
By Strategic HR Inc.
I have an employee that is on long term disability. How do I handle their health insurance benefits since they are no longer actively employed?
Ideally, employers should address this in their employee handbooks prior to such an event happening so they have a clear practice in place before such a stressful situation arises. Determining how benefits are handled while someone is out on any type of leave should be clearly defined.
In most instances, employers continue to carry employees on health insurance for a pre-determined time period after going on a leave. There really is no “typical” time period, but regardless of what you choose, ensure that your insurance carrier will allow the continued coverage. Some employers terminate coverage as soon as the disability is approved; others after six months of LTD; and even some that agree to cover those on disability up to one year. In these situations, employers typically require the employee to pay their “normal” employee contribution for health care and the employer handles them just like an active employee – subject to the carrier agreeing, of course.
Keep in mind that after coverage is terminated, if you are subject to COBRA you must offer COBRA coverage for the employee as well.
Regardless of the length of time you agree to continue coverage, be sure to get approval from your insurance company and be consistent in your application of the continued benefits.