In a recent opinion letter the U.S. Department of Labor found that a school employer was required to maintain a group dental plan during FMLA leave. It also found that, where a school employee takes FMLA leave at the end of the academic year, the employer was required to maintain group dental benefits during the Summer. In so finding, the DOL made it clear that a "group health plan" was not limited to mean a "major medical plan."
The school district employer (the District) offers a group health insurance plan that provides medical care coverage for instructional employees and separately offers a group dental insurance plan for these employees. The District pays 100% of he dental insurance premiums up to a maximum amount per month for 12 months, although the teacher work year begins in August and ends in June. The District employs an administrator who assists employees with disputed claims. The District may grant exceptions for a claim that is denied by the plan administrator. The plan is self-insured. The District negotiates a contract with another organization to serve as the plan's third party administrator. Plan premiums are negotiated based, in part. on a review of past claims.
The teacher's Union argued that the dental plan is also a group health plan that must be maintained during FMLA leave. The District maintains that the dental plan is not a group health plan under the FMLA. The District argues that the dental plan is not a part of, or a supplement to, its "group health plan," but rather, is a separate group dental program. Therefore, the District does not maintain the dental insurance coverage for employees during FMLA leave or during summer break if FMLA leave is taken near the end of the school year.
The FMLA incorporates the definition of a "group health plan" from section 5000(b)(1) of the Internal Revenue Code. The definition states:
The term "group health plan" mans a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organization to provide health care (directly or otherwise) to employees, former employees, the employer, or others associated or formerly associated with the employer in a business relationship, or their families.
The DOL found that the District's dental plan comes within the broad definition of a "group health plan.'" The plan pays percentages for the treatment cost for dental care for employees, including diagnostic and preventive oral services, basic dental services, endodontics, periodontics, oral surgery, major restorative surgery, prosthetic repairs and adjustments, and orthodontics. The DOL also noted that the summary plan description describes the plan as a group benefit plan.
The DOL also found that the dental plan did not did not fall within the exclusions to health plan coverage. As set forth in the DOL regulations at 29 CFR 825.800 and 825.209(a), health coverage under which employees purchased individual policies are excluded from the FMLA definition of a "group health plan" if:
- the employer makes not contribution to the plan;
- participation in the program by the employee is voluntary;
- the sole functions of the employer with regard to the program are, without endorsing the program, to permit the insurer to publicize the program to employees, to collect premiums paid by the employee through payroll deductions and to remit premiums to the insurer;
- the employer receives no consideration in cash or otherwise in connection with the program, other than reasonable compensation for administrative services; and
- the premium charged to the employee does not increase in the event the employment relationship ends.
Here, employee do not purchase individual policies, the District contributes 100% of the plan premiums. The involvement of the District in the administration of the plan, including the retention of a plan administrator and negotiation of premiums, the DOL found, went well beyond what is permitted to meet the exclusion.
The group dental plan is a "group health plan" within the meaning of the FMLA. As such, the District must conform with the FMLA requirements governing group health plans. The District must maintain the same group dental benefits during FMLA leave as if the employee were continuously employed during the period of FMLA leave.
The DOL also found that, pursuant to 29 CFR 825.601(a), the District was required to provide instructional employees who are on FMLA leave at the end of the school year with any benefits over the summer vacation that employees would normally receive if they had been working at the end of the school year. According to the DOL, this means that all benefits, including group dental benefits, must be provided to those instructional employees on FMLA-qualifying leave at the end of a school year.
Comment: An FMLA-covered "group health plan" is not limited to "major medical plans." Any health plan that meets the incorporated Internal Revenue Code definition of a "group health plan," even if separate from an employer's general group health plan, will be considered as an FMLA-covered "group health plan." As such, employers will have to abide by the FMLA rules governing the maintenance and restoration of group health plan benefits during and at the conclusion of FMLA leave.
The DOL Opinion letter is FMLA2006-6-A (Oct. 5, 2006). It is available on the DOL's website at http://www.dol.gov/esa/whd/opinion/fmla.htm