The Compliance Download, June Vol. 1

Health Plan Coverage During Employee Leave: Key Compliance Considerations

Health plan coverage during employee leave remains a key compliance issue for Human Resources and benefits teams, particularly when determining whether employees retain eligibility under federal leave laws, ACA requirements, and plan eligibility rules.  

Employers covered by the Family and Medical Leave Act (FMLA) must continue group health coverage for eligible employees on protected leave under the same terms provided to active employees, including maintaining the same employer contribution levels. Additional protections may apply under USERRA and the ADA. Notably, USERRA applies to all employers and permits employees on military leave to continue health coverage for up to 24 months, with employees potentially responsible for up to 102% of the premium after 31 days of service. Employers should also be mindful that improperly extending active coverage to ineligible employees can create COBRA exposure, claims liability, and carrier compliance issues.  

This guidance underscores the importance of aligning leave administration practices with Affordable Care Act (ACA) employer shared responsibility rules. Applicable Large Employers (ALEs) must carefully monitor how leave impacts full-time status determinations. For employers using the ACA look-back measurement method, employees generally retain full-time status throughout the stability period, even during certain unpaid leaves, requiring continued offers of coverage to avoid potential penalties. There are three IRS-approved methods for collecting employee premium contributions during unpaid FMLA leave: prepay, pay-as-you-go, and catch-up arrangements. Employers are encouraged to maintain clearly documented leave and eligibility policies, apply them consistently, and coordinate administration practices with carriers and stop-loss providers to reduce compliance risk. 

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MHPAEA Compliance Update: Focus on NQTL Comparative Analyses

Federal agencies have issued a recent report to Congress highlighting ongoing enforcement efforts under the Mental Health Parity and Addiction Equity Act (MHPAEA), with a particular focus on nonquantitative treatment limitations (NQTLs). MHPAEA requires health plans to ensure that limitations affecting access to mental health and substance use disorder (MH/SUD) benefits are comparable to those applied to medical and surgical benefits, and, to document this through detailed comparative analyses. Regulators continue to prioritize NQTLs that significantly impact access to care, such as provider network standards and treatment exclusions, and expect plans to produce compliant analyses upon request.  

From a compliance perspective, the report underscores that many plans initially submit incomplete or deficient analyses, increasing the risk of findings and corrective action. However, organizations that proactively prepare thorough, well-documented comparative analyses tend to experience more favorable and expedited outcomes during regulatory reviews. Importantly, employers retain primary responsibility for MHPAEA compliance, even when working with third‑party administrators or other vendors. Employers should confirm that required analyses have been completed, clearly assign responsibilities in vendor contracts, and be prepared to produce documentation to regulators to reduce compliance risks. 

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