An employer faces many issues when they lose an employee because of accident or medical sick leave. How to continue benefits to an employee on medical leave is one of them. The courts have not provided any clear direction and have left it up to individual employers to establish their own corporate policy. However, one clear factor is that you must treat all employees under the same circumstances in a fair and equitable manner.
It is very important to establish a corporate policy for your firm and to have some documentation on file to support this policy should the matter arise.
The issue of providing ongoing Health and Dental coverage to an employee typically becomes a talking point once an employee has been off work (either WCB or an off-the-job illness or injury) for 2 to 3 months, and/or when the Long-Term Disability (LTD) kicks-in. At that time, the employer will first need to determine if the employee is likely going to come back to work. From that, decisions need to be made
A typical group insurance policy allows continuation of coverage for as long as the employer considers the employee to be on “medical leave” and as such, is still classified as an employee. The length of this medical leave could be a few months or even a few years. The insurance policies give the employer considerable leeway with continuation of benefits.
The decision then falls on the employer to decide how long to provide Health and Dental coverage. Normally, the group insurance premiums for life insurance and/or LTD will be “waived” during an ongoing disability. But for ongoing Health and Dental there are two “cost” concerns: First, the Health and Dental premiums need to be paid. Second, there is the potential for the disabled employee to incur major health expenses that will raise the group policy’s claims experience and result in higher premiums in the firm for everybody.
Out there in the real world, we see employers with a corporate policy that provides “continuation of benefits” to disabled employees that lasts as little as six months (highly unusual), or for a period of one or two years (most common). In some situations, employers maintain coverage indefinitely (rarely).
Another common scenario is to provide Health and Dental for two years following the start of LTD benefits. That’s because most group LTD policies change the definition of “Disability” after benefits have been paid for 24 months, so this is a natural transition time.
Ultimately, the period that Health and Dental benefits continue falls on the employer’s shoulders. The key issue is to treat employees fairly and equally. In the future, the BC courts or labour codes may provide direction. In the meantime, it would be prudent to have a written policy established and in place to address this issue. A consultation with a Labour Lawyer might be money well spent.