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Posted by Louise Gagne, FICA, FSA, May 16 2018
Disability Cases
Maintaining Insurance Coverage While Off Work: Do's & Don'ts


When your employees are off work on a maternity leave, a leave without pay or due to a temporary layoff, you plan for their replacement or the transfer of their workload, the utilization of banked vacation time, etc. But do you know what will come of their insurance coverage during their absence? Is coverage continuation mandatory? Who will be paying the premiums? The answer to these questions may differ depending on the type of absence. Find out here what you need to know to properly manage such situations.


Under Quebec’s prescription drug insurance legislation, employees are required to retain at least the drug insurance benefit of their employer’s group plan whenever possible. This means that if the policy allows for the continuation of one or several benefits while employees are off work, drug coverage must be maintained (subject to the right to opt out in order to be covered under their spouse’s policy). The only case where employees may exempt themselves from this requirement is when there is no possibility of retaining coverage, as explained below.


Under Quebec labour standards, employers are required to provide employees on leave with the same insurance coverage as for active employees and pay the employer’s share of the cost during such leaves. Some policies, but not all, allow employees to choose which benefits will be maintained. During the statutory leave period (up to 50 weeks when the maternity leave and the parental leave are combined), employers must therefore pay the premiums for the retained benefits as if the employee was still at work. However, should the leave extend beyond this period, employers could ask employees to pay 100% of the cost of their coverage.


There are no legal provisions governing the continuation of coverage during these types of absences. Employers could decide not to maintain any coverage during these periods. If employers want to provide continuation, the policy will set out which benefits can be maintained or not. Customarily, employees are not allowed to retain their short and long-term disability insurance, and the length of trips may be limited under travel insurance. It is also standard practice to ask employees to pay 100% of the cost of retained benefits.

Insurance coverage during a STRIKE OR LOCKOUT

Often, only drug insurance will be continued for a 30-day period, but the insurer could also propose the same type of clause as for leaves without pay or temporary layoffs.


When choices are allowed, it is imperative to advise the insurer or administrator prior to the employee’s departure. Decisions cannot be made retroactively. The best practice is to give employees a letter confirming the benefits they selected and the effects of their choices, especially if they have not retained disability insurance coverage. Should the employee become disabled while on leave, this will save you all the trouble you would have if there is no documentary evidence that it was the employee’s own choice not to continue his/her disability insurance coverage.


There are 2 ways to collect the employee’s share of insurance premiums: with postdated cheques or by accumulating the amounts and deducting them upon the employee’s return to work.


What can you do when an employee who decided to retain one or several benefits during an absence then refuses to pay the cost of the maintained coverage? Whether or not such coverage is 100% paid by the employee, nothing forces the employer to bear the full cost.

The employer must write a first letter reminding the employee that he/she owes money, and that insurance coverage will be terminated if no payment is received within 30 days (legally prescribed minimum notice period for interrupting the prescription drug coverage for non-payment).

If such payment is not received within the required time, the employer should send a second letter confirming that coverage has ended due to non-payment.

In the case of employees who were not exempted from your plan’s drug insurance coverage, you must also notify them that they are violating the prescription drug insurance legislation and they will have to pay in full all their drug expenses. They will not be entitled to join the RAMQ public drug insurance plan, as they are not eligible because they have access to a private group plan.


If disability insurance coverage was retained and the employee is unable to work at his/her scheduled return to work date, the date of disability will be deemed to be the scheduled return to work date. The short-term disability elimination period will start at that date and benefits will follow. If disability insurance coverage was not retained, no benefits will be payable.


If you have additional questions or would like some clarifications, do not hesitate to contact your AGA advisor.


Louise started her career at Blue Cross before working as a Senior Advisor for a large actuarial firm for more than 15 years. Fellow of the Canadian Institute of Actuaries, Louise joined AGA in June 2014. She assumes responsibility for training, provides technical support, and supplies advisory activities for the large business clientele. Louise is also lecturer at l’UQAM.
Louise Gagne, FICA, FSA