If an employee takes a “uniformed service” (USERRA) or Family Medical Leave Act (FMLA) leave of absence, they can continue their HRA and Flex benefits during their leave and make a change in their elections upon their return.  Virtually all Employers are subject to the USERRA requirements while only larger (over 50 employees) groups are subject to FMLA. 
   
For FMLA, covered employers must grant an eligible employee up to a total of 12 workweeks of unpaid leave during any 12-month period for one or more of the following reasons:

• for the birth and care of the newborn child of the employee; 
• for placement with the employee of a son or daughter for adoption or foster care; 
• to care for an immediate family member (spouse, child, or parent) with a serious health condition; or 
• to take medical leave when the employee is unable to work because of a serious health condition.

PRE-TAX, PRE-PAID COBRA, FMLA and/or USERRA PAYMENTS  
Whatever payment options you offer your employees for continuing their health and health-related insurance during their FMLA or USERRA leave will also be available to your HRA and Med-FSA participants.
 
There are three options that the employer can offer to allow employees to pay for their portion of their premium costs during their FMLA leave:  pre-pay, pay-when-you-return and pay-as-you-go.   Your company can choose to allow all three options but you must allow at least two of the options. 

• "Pre-pay" can be paid pre-tax but only if the period of coverage prepaid does not extend beyond the first month of the next plan year.  
• "Pay-when-you-return" can only be pretax as long as it is within the same plan year as the coverage period. 
• ”Pay-as-you-go” can only be paid pre-tax if the employee is still receiving a paycheck from you, such as vacation/pto payments.

COBRA premium payments (including those for the Medical Flex Spending Account and the Health Reimbursement Arrangement) can be paid pre-tax out of any compensation that is due at the time of the COBRA Qualifying Event.
 
YOU CANNOT PAY PRE-TAX IN ONE YEAR FOR COVERAGE IN ANOTHER YEAR   
If a participant is pre-paying FMLA, COBRA or USERRA premiums, only the costs for the current year coverage can be paid pre-tax, or in the case of pre-pay, the first month of the next plan year can be paid pre-tax.  HOWEVER, if you have adopted the 2½ Month Rule, your Premium Only Plan or Insurance benefit may also be “covered” by the 2½ Month Rule and your employees can pay pre-tax in one year for coverage during your extended claims grace period in the following year.

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