Must Employers Continue to Offer Health FSAs for Employees on Leave?

Most employers are aware that they must continue to provide employees with health benefits while those employees are on valid FMLA leave. However, it's important for employers to also remember that health FSAs that are offered by the employer are components of the employer's Section 125 cafeteria plan. While these accounts are different from traditional health insurance coverage, they are still considered group health plans for legal purposes. Employers have the same options for continuing health FSA coverage for employees on FMLA leave, including the pre-pay option, pay-as-you-go coverage, or the catch-up option. However, employers can also elect to terminate health FSA participation rights for the period the employee is on FMLA leave and allow the employee to return at a full, or partial, FSA election to address the contributions the employee missed during the period of leave. For more information on the rules governing health FSAs, visit Tax Facts Online. : Q 8902.