Leave Without Pay Status and Insufficient Pay

Coverage

Continued Coverage

Generally, an employee’s enrollment may continue for up to 365 days of leave without pay (LWOP) unless he/she wants it to terminate or does not respond to his/her employing office's notice about continuing coverage during a period in LWOP status. He/she must pay the employee share of premiums for every pay period that his/her enrollment continues.

Termination

An employee’s enrollment will terminate at the end of the pay period which includes the 365th day in consecutive leave without pay status. He/she will have a 31-day extension of coverage and conversion rights.

4-Month Rule

The 365 days of continued enrollment during LWOP status is not considered to be broken by any period(s) in pay status of less than 4 consecutive months. If the employee is in LWOP status and returns to pay status for less than 4 consecutive months, then returns to LWOP status, he/she does not begin a new 365-day period of continued enrollment. Instead, the second (and any other) period in LWOP status is treated as continuation of the first. If he/she is in a pay status during any part of a pay period, the entire pay period is not counted toward the 365-day limit.

If an employee returns to pay status for at least 4 consecutive months during which he/she is paid for at least part of each pay period, he/she is entitled to begin a new 365-day period of continued enrollment while in LWOP status.

Example 1

Arthur is in leave without pay status on January 1, 2018; returns to pay status on July 1, 2018; returns to leave without pay status on September 1, 2018; returns to pay status on January 1, 2019; and then back to leave without pay status on March 1, 2019. Since each return to pay status was for less than 4 months, his enrollment terminates at the end of the pay period that includes May 1, 2019, the 365th day in continuous leave without pay status.

Example 2

Francine is in leave without pay status and returns to work on one occasion. The period in pay status is over 4 months. She is in leave without pay status on January 1, 2017; pay status on July 1, 2017; and leave without pay status on January 1, 2018 (a new 365-day eligibility period begins).

Her enrollment terminates at the end of the pay period that includes December 31, 2018, the 365th day in continuous leave without pay status.

Return to Pay Status after 365 Days in Leave without Pay Status

If an employee’s enrollment terminates because he/she exhausted the 365 days continuation of coverage while in LWOP, he/she must elect to enroll when he/she returns to pay status (if he/she is eligible). If the employee enrolls, and then works less than 4 months, his/her enrollment must again be terminated on the last day of his/her last pay period in pay status. He/she is not eligible for another 365-day period of continued coverage unless he/she is in pay status for at least 4 months.

The employee’s employing office should have a follow-up system that will trigger an enrollment termination at the end of the pay period that includes the 365th day of LWOP.

When an Employee Enters Leave Without Pay or Insufficient Pay Status

Employing Office Notification

Employing offices must be able to identify through timekeeping/payroll data all employees in LWOP status and employees with insufficient pay to cover the premiums. Tracking such employees via the SF 50 is not reliable since one is not issued when an employee enters LWOP status for less than 30 days or when an employee has insufficient pay.

His/her employing office must give him/her a written notice as soon as it becomes aware that premium payments cannot be withheld from his/her salary because he/she is in LWOP status or his/her pay is insufficient to cover his/her premiums. The employee’s employing office may use the sample notice provided here or any other notice that adequately explains his/her options. This notice constitutes due process.

The notice:

• informs him/her of his/her options regarding continuing or terminating the enrollment;
• explains the effect of a termination;
• explains that if he/she decides to continue coverage, he/she must agree to pay the premium directly, incur a debt, or it may give him/her the option to pre-pay premiums;
• provides a space for him/her to continue or terminate his/her enrollment; and
• states that if he/she does not return the notice within 31 days after receiving the notice (45 days if he/she lives overseas), his/her enrollment will automatically terminate.

If the employee’s employing office cannot give him/her the written notice in person, it must send the notice by first class mail. Electronic mail cannot be used to give the written notice because the employee may not be at his/her desk to receive it. His/her receipt is especially important because if he/she does not timely respond, his/her coverage will be terminated.

The employee’s employing office must keep track of whether he/she signed and returned the notice within the required time frame. A notice that is mailed is considered to be received by him/her 5 days after the date of the notice. When he/she mails the signed form, the date of the postmark is considered to be the date the notice is returned to his/her employing office.

When an Employee Chooses to Continue Enrollment

If an employee elects to continue coverage during LWOP status or insufficient pay, he/she can choose either to pay the premiums directly or to incur a debt. His/her employing office may also offer a pre-pay option.

The Employee Must Pay His/Her Share

The employee must still pay his/her share of health benefits premiums if he/she is in LWOP status for an entire pay period, or if his/her pay during a pay period doesn't cover the full amount of withholdings due, unless he/she wants the enrollment to terminate. His/her employing office must notify him/her of the choices available to him/her and provide him/her with a method to make direct premium payments.

If he/she elects to continue his/her enrollment but he/she doesn't make direct premium payments, the employee’s employing office must advance him/her enough pay to cover the employee share of the premiums, as explained below. See "Employing Office Notification" for notification requirements when he/she enters LWOP status or when his/her pay becomes insufficient to make the withholdings.

Pay-As-You-Go Option

Under this option, the employee pays his/her share of FEHB premiums directly to his/her employing agency while on LWOP. These payments generally will be made with after-tax monies, since there is no pay from which to make deductions.

If he/she chooses this option, he/she is agreeing that if he/she does not pay the premiums, he/she will be incurring a debt to his/her employing office. He/she will have to repay this amount once he/she returns to pay status. If he/she does not return to work or his/her employing office cannot recover the debt in full from his/her salary, it may recover the debt from:

• a lump sum payment of accrued leave;
• income tax refunds;
• amounts payable under the Civil Service Retirement System or Federal Employees Retirement System; or
• any other source normally available for the recovery of a debt due the United States.

Catch-up Option

Under the Catch-up Option, the employee agrees in advance of the LWOP period that:

• He/she will continue FEHB coverage while on LWOP;
• His/her employer will advance his/her share of FEHB premiums to OPM during his/her LWOP period; and
• He/she will repay the advanced amounts when he/she returns from LWOP.

The repayment of the amount owed will be treated on a pre-tax basis, if it's deducted from pay and he/she participates in premium conversion at the time the deduction is made.

If he/she chooses to repay the amount owed to his/her agency directly out-of-pocket, his/her taxable income is not reduced.

Prepay Option

The employee’s agency may (but is not required to) offer him/her the option to prepay his/her FEHB premiums from salary before he/she goes on a period of LWOP.

The amount of FEHB premiums he/she prepays in advance may either be deducted from his/her pay or paid directly "out-of-pocket" to his/her agency. Payments made "out-of-pocket" do not reduce his/her taxable income. The amount of FEHB premiums that he/she prepays will be treated on a pre-tax basis, if it is deducted from his/her pay and he/she participates in premium conversion.

IRS rules limit the amount he/she may prepay on a pre-tax basis. If his/her period of LWOP will span two tax years, the amount that he/she may prepay on a pre-tax basis may not exceed the amount of FEHB premiums due for the remainder of the current tax year. If he/she wishes to prepay the amounts due for the subsequent tax year as well, the deductions must be made after-tax. He/she may also use the Pay-As-You-Go or Catch-up Options for amounts due in the subsequent tax year.

Example

Max participates in premium conversion and has $100 per month in FEHB premiums deducted from his pay. He will go on leave without pay for three months beginning on October 31, 2018 and opts to continue his FEHB coverage. Max uses the pre-pay option to pay the $300 in FEHB premium payments that will be due while he is on leave without pay. He will receive pre-tax treatment on $200 of his FEHB premium prepayment (the amount he will owe for November and December 2018). The remaining $100 he prepaid (the amount due for January 2019) must be given after-tax treatment.

Employing Office Forwards both Government and Employee Shares each Pay Period

Public Law 104-208 requires an employee’s employing office to forward the full FEHB premium (both Government and employee contributions) to OPM on a current basis when he/she is in LWOP status or when his/her pay is insufficient to make the withholdings. His/her employing office must advance his/her salary to cover the employee share of his/her health benefits premiums when he/she is in LWOP status and he/she does not make direct premium payments to his/her employing office, effective with the pay period beginning on or after September 30, 1996.

Recovering Salary Advances for Paying the Employee Share of Premiums

When his/her employing office advances his/her salary (the Catch-up Option) to cover the employee share of his/her health benefits premiums, he/she incurs a debt to his/her employing office for the advance payments. It can recover that amount in the same manner as pay advanced to new appointees under 5 U.S.C. 5524a(c). It can offset against his/her accrued pay, amount of retirement credit, any other amounts due him/her from the U.S. or District of Columbia Governments, or in any other method provided by law.

The employing office that advanced his/her salary is permanently responsible for collecting the debt and must retain his/her written notice electing to continue FEHB coverage.

Since he/she must sign a statement agreeing that his/her debt may be withheld in full from future pay when he/she receives advance salary to cover his/her health benefits premiums, under 5 CFR 550.1102(b) his/her employing office is not required to offer him/her a hearing before it can begin its recovery of advance payments. However, his/her employing office must give him/her a notice that it intends to recover the advanced pay.

Coordination of Debt Repayments with Retirement or Workers' Compensation

When he/she applies for disability retirement or workers' compensation benefits, his/her annuity or compensation is generally payable from the day following his/her last day of pay. If he/she is eligible to continue health benefits coverage, the employee share is withheld from his/her annuity or compensation retroactive to the beginning date of the annuity or compensation payments.

If he/she has not made payments to his/her employing office for coverage during LWOP status (either directly or through collection of the debt), his/her employing office recovers withholdings and contributions for the period in the same way as it adjusts errors in withholdings and contributions.

If an employee paid his/her employing office for coverage during LWOP status and withholdings are being made from his/her annuity or compensation benefits for the same period, his/her employing office must refund these amounts to him/her to avoid double payments covering the same period. His/her employing office makes the refund in the same way that it adjusts errors. In retirement cases, his/her employing office must refund the amount it received from him/her for periods after his/her last day in pay because these amounts are withheld from his/her annuity.

When his/her annuity doesn't begin on the day following his/her last day of pay, the employee’s employing office will not refund payments he/she made for time in LWOP status until it receives OPM's notice that his/her disability retirement application was approved. This may happen when he/she doesn't meet the requirements for an annuity on the day after his/her last day of pay (e.g., he/she is receiving a disability annuity under CSRS and he/she doesn't complete 5 years of service until a later date). If his/her employing office isn't able to determine if withholdings from his/her annuity will cover all periods of LWOP status after the last day of pay, it may request that OPM verify the correct period to be covered by the refund. Its request may be attached to his/her health benefits documents when they are sent to OPM with the final Individual Retirement Record (SF 2806 for CSRS or SF 3100 for FERS).

In workers' compensation cases, his/her employing office may request that the Office of Workers' Compensation Programs verify the dates that health benefits premiums have been withheld from his/her compensation benefits before it will refund any amounts he/she paid to it.

When he/she is a retiring employee and is indebted to his/her employing office for advanced pay to cover the employee share of his/her health benefits premium for a period that he/she wasn't entitled to annuity or compensation benefits, the debt may be recovered by offset from his/her annuity. See chapter 4 of the CSRS and FERS Handbook for Payroll and Personnel Offices.

When an Employee Allows His/Her Enrollment to Terminate

His/her enrollment will terminate if he/she:

• does not sign and return the written notice within 31 days of receiving the notice (45 days if he/she lives overseas), or
• returns the signed notice, electing to terminate his/her enrollment.

In either event, the employee’s employing office must terminate his/her enrollment on the Notice of Change in Health Benefits Enrollment (SF 2810). It must note in the remarks section: "Employee (did not timely return written notice) (elected to terminate the enrollment) during a period of (LWOP status) (insufficient pay)." The file copy of the notice (or if he/she elected to terminate his/her enrollment, his/her signed notice) should be attached to the SF 2810 and filed in the permanent side of the Official Personnel Folder and included in his/her eOPF. His/her employing office will distribute copies of the SF 2810 to his/her payroll office and carrier.

The effective date of his/her enrollment termination is retroactive to the end of the last pay period that premiums were withheld from his/her pay.

Effect of Termination

If an employee decides not to continue his/her coverage, his/her enrollment is terminated, not canceled. This means that he/she is entitled to a 31-day extension of coverage and conversion privilege. He/she does not have to wait until the next Open Season to reenroll.

A termination is not considered a break in the continuous enrollment necessary for continuing coverage during retirement.

An employee is not eligible for temporary continuation of coverage (TCC) when his/her coverage terminates during LWOP status or insufficient pay. TCC is only available when his/her coverage terminates because of separation from employment.

Retroactive Reinstatement of Terminated Coverage

If he/she couldn't return the notice within the required time frame for reasons beyond his/her control, the employee may request his/her employing office to reinstate his/her coverage. An employee must file the request within 30 calendar days from the date he/she was given notification of the termination by his/her employing office. He/she must describe the circumstances that prevented him/her from returning the notice on a timely basis and include the signed written notice electing to continue coverage and agreeing to either pay the premium directly or incur a debt.

If an employee’s employing office decides to reinstate his/her enrollment, it completes parts A, D, and H of the Notice of Change in Health Benefits Enrollment (SF 2810); notes in the remarks section "Employee reinstated"; and distributes copies of the SF 2810 to his/her payroll office and carrier.

If the employee’s employing office rejects his/her reinstatement request, it must notify him/her of its decision and provide information about his/her reconsideration rights.

When An Employee may Enroll after Termination

If an employee terminated his/her enrollment while he/she was in LWOP status, he/she may reenroll within 60 days of returning to pay status in a position in which he/she is eligible for FEHB coverage.

If an employee terminated his/her enrollment while his/her pay was insufficient, he/she may reenroll within 60 days after the end of the first pay period his/her pay becomes sufficient to cover the premium.

His/her reenrollment takes effect the first day of the first pay period after his/her employing office receives his/her request to reenroll and that follows a pay period in which he/she was in pay status for any part of that pay period.

He/she can reenroll in any plan or option available to him/her. He/she is not restricted to enrolling into the same plan and option he/she had when his/her coverage terminated.

If an employee does not reenroll during the 60-day time period, he/she must wait for an Open Season to enroll, unless another qualifying event occurs before the next Open Season. This would be considered a break in the continuous coverage necessary for continuing coverage into retirement.

Employees Erroneously Allowed to Continue FEHB Coverage beyond 365 Days of Leave without Pay

In the case of an employee who was on LWOP, elected to incur-a debt for the employee portion of the premium, and whose enrollment was erroneously allowed to continue for an extended period of time beyond the 365th day, the premium debt incurred by the employee for coverage may be significant.

Therefore, in cases where an enrollee on LWOP has been enrolled longer than 365 days, the agency must allow the employee to choose whether to:

1. Terminate the enrollment prospectively effective on the last day of the pay period in which the error was discovered and keep the coverage during the erroneous enrollment period (meaning, if the employee incurred a debt, the employee owes the employee share of the premiums to the agency for that period, but the employee is entitled to full benefits during the period of the erroneous enrollment; or
2. Terminate the enrollment retroactively back to the date the FEHB enrollment should have terminated (meaning the employee owes no premiums for the erroneous enrollment period, but was not covered during that period and is responsible for any claims paid). This allows the employee to avoid a large premium debt due to the agency's error if few or no services were used.

Special Circumstances

Student Trainees

If he/she is a student trainee with a career or career-conditional appointment, his/her enrollment continues during periods of LWOP status as long as he/she is participating in the Student Career Experience Program (5 CFR 213.3202(b)). If he/she wants to continue his/her enrollment during periods LWOP status, he/she must continue to pay the employee share of the premiums.

Active Duty Military Service

Under the Uniformed Service Employment and Reemployment Rights Act of 1994 (USERRA), if he/she enters active duty military service for more than 30 days, he/she may continue his/her health benefits enrollment for up to 24 months, unless he/she elects to have his/her enrollment terminated before he/she enters active duty. (He/she is considered to be on military furlough for health benefits purposes.) During the first 365 days in LWOP status, he/she is required to pay only the employee share of the premium and he/she may postpone payment. After the first 365 days, he/she must pay both the employee and Government shares plus a 2 percent administrative charge directly to his/her employing office on a current basis. His/her eligibility under USERRA ends 24 months after his/her absence for active duty military service begins or 90 days after his/her service ends, whichever is earlier.

While Receiving Compensation

An employee’s enrollment may continue when he/she receives compensation under the Federal Employees' Compensation law for the first 365 days while in LWOP status. After that period, he/she must meet the same participation requirements as for continuing an enrollment after retirement. OWCP, not his/her employing office, is responsible for determining his/her eligibility.

Part-time Employees

If he/she is a part-time career employee who receives a prorated Government contribution, during periods of LWOP status he/she must pay the same health benefits premiums that are withheld from his/her pay while he/she is in pay status in his/her regularly scheduled tour of duty.

Temporary Appointments

If he/she is a temporary employee (and is not expected to work 130 hours per month for at least 90 days) enrolled for FEHB coverage, during periods of LWOP status he/she must continue to pay both the employee and Government shares of the premiums.

If he/she accepts a temporary position while his/her enrollment is continuing during LWOP status, his/her enrollment must be transferred to the employing office for his/her temporary position.

If he/she returns to LWOP status when his/her temporary employment ends, the enrollment must be transferred back to his/her original employing office. The original employing office must determine the remaining length of time he/she is entitled to continued coverage while in LWOP status. If he/she is no longer being carried as an employee in his/her original position when his/her temporary position expires, his/her enrollment must be terminated.

The two employing offices involved must coordinate these actions so that withholdings and contributions are made timely. The employing office that first becomes aware of the situation must contact the other employing office and arrange for transfer of the enrollment, if appropriate.

Family and Medical Leave

Under the Family and Medical Leave Act (FMLA) of 1993 (Public Law 103-3), an employee is entitled to up to 12 weeks of unpaid leave for certain medical and family needs. See Pay and Leave and 5 CFR Part 630 for information about family and medical leave.

FMLA leave usually runs concurrently with the 365 day period of coverage during LWOP status allowed under the FEHB law. In these cases the regular rules for coverage during periods in LWOP status apply. If he/she is granted leave under FMLA that exceeds the 365 days of continued coverage allowed under the FEHB law, he/she must pay his/her share of premiums directly to his/her employing office on a current basis during the period that exceeds 365 days. (This may happen if he/she has already used an extensive amount of LWOP before him/her invokes his/her rights under FMLA).

If his/her coverage is terminated for nonpayment during FMLA leave, he/she may reenroll when he/she returns to pay and duty status.

Appointments to Employee Organizations

If an employee goes into LWOP status to serve as a full-time officer or employee of an employee organization, he/she may elect to continue health benefits coverage within 60 days from the start of the LWOP status.

The health benefits coverage continues for the length of the appointment, even if the LWOP status lasts longer than 365 days. He/she must pay to his/her employing office the full cost of the health plan premiums. There is no Government contribution. He/she must pay his/her premiums to the employing office before, during, or within three months after the end of each pay period. He/she will be eligible for premium conversion if the employee organization adopts the OPM premium conversion plan.

His/her employing office must keep him/her informed of all developments that affect health benefits. It must also adjust his/her share of the premium and the agency contributions when appropriate.

His/her coverage will terminate if he/she does not pay his/her premiums within this time frame, subject to the 31-day extension of coverage and conversion right. His/her coverage cannot resume until he/she enters into pay and duty status in Federal service. Exception: his/her coverage will be restored retroactively if his/her employing office finds that he/she was unable to make the premium payments for reasons beyond his/her control and he/she makes the payments at the first opportunity.

Appointment to State or Local Governments or Institutions of Higher Education, Indian Tribal Government, or other Organizations

If an employee goes into LWOP status while assigned to a State or local government, institution of higher education, Indian tribal government, or certain other organizations specified in 5 CFR Part 334 , he/she is entitled to continue health benefits coverage for the length of the assignment, even if the LWOP status lasts longer than 365 days.

He/she must elect to continue his/her health benefits coverage and pay the employee share of his/her premiums to his/her employing office before, during, or within three months after the end of each pay period. His/her employing office must continue to pay its contributions as long as he/she makes his/her payments.

An employee’s employing office must keep him/her informed of all developments that affect health benefits. It must also adjust his/her share of the premium and the agency contributions when appropriate. His/her coverage will terminate if he/she does not pay his/her premiums, subject to the 31-day extension of coverage and conversion right. His/her coverage cannot resume until he/she enters into pay and duty status in Federal service. Exception: his/her coverage will be restored retroactively if the employing office finds that he/she was unable to make the premium payments for reasons beyond his/her control and he/she makes the payments at the first opportunity.

If he/she elects to be covered under a State or local government's health benefits program that OPM determines to be similar to the FEHB Program, he/she is not entitled to continue coverage under the FEHB Program. Send the request for OPM's determination to Office of Personnel Management, Healthcare and Insurance, P.O. Box 436, Washington, D.C. 20044.

Transfers to International Organizations

An employee may continue health benefits coverage if he/she is transferred to an international organization as provided in 5 U.S.C. 3582. He/she must elect to continue health benefits coverage and pay the employee share of his/her premiums to the employing office before, during, or within three months after the end of each pay period. His/her employing office must continue to pay its contributions as long as he/she makes his/her payments. He/she will be eligible for premium conversion if the organization agrees to adopt the OPM premium conversion plan.

His/her employing office must keep him/her informed of all developments that affect health benefits. It must also adjust his/her share of the premium and the agency contributions when appropriate.

An employee’s coverage will terminate if he/she does not pay premiums, subject to the 31-day extension of coverage and conversion right. His/her coverage cannot resume until he/she enters into pay and duty status in Federal service. Exception: his/her coverage will be restored retroactively if his/her employing office finds that he/she was unable to make the premium payments for reasons beyond his/her control and he/she makes the payments at the first opportunity.

If he/she does not elect to continue the health benefits enrollment, he/she is not considered to be a Federal employee for health benefits purposes while employed by the international organization.

Regulations governing these transfers are in 5 CFR part 352.

If An Employee Pays His/Her FEHB Premiums over less than 12 Months

If his/her annual salary is normally paid over a period of less than 12 months (such as a teacher on a 10-month contract), his/her employing office will prorate the annual health benefits contributions over the number of salary installments during the year, so that he/she doesn't pay any additional premiums during the expected nonpay period. If he/she enters a LWOP status during his/her normal working period, he/she must pay premiums for that period the same as other employees in LWOP status.

Back to Top