Short answer: Yes, if the plan allows. Starting or returning from an unpaid leave of absence is a change in employment status under the cafeteria plan rules, and FMLA leave has its own rules.
The cafeteria plan regulations list ‘a commencement of or return from an unpaid leave of absence’ as a change in employment status. A plan that adopts the change-in-status rules can let the employee make election changes consistent with that event.
For unpaid FMLA leave, the employer must either let the employee revoke health coverage or keep coverage and let them stop paying their share during the leave. The plan may offer three ways to pay for coverage kept during leave, on terms at least as favorable as for employees not on FMLA leave:
- Pre-pay before leave starts (the employer cannot require it);
- Pay-as-you-go during the leave, usually after-tax;
- Catch-up after return, with the employer advancing the premiums.
For paid FMLA leave, the employee’s share comes out the normal way, typically pre-tax payroll deduction.