12 Apr Maternity Leave & Benefits | How-to Guide
Maternity or parental leaves are inevitable in almost any organization. But many organizations stumble when it comes to benefits and potential risks to plan members when decisions around these leaves are made.
When an employee takes a temporary leave for birth or adoption of a child, benefits can be maintained for the duration of the leave.
- Employer-paid: some organizations continue to pay for employees’ benefits through the leave.
- Employee-paid: some organizations have employees pay for monthly benefit premiums – either just the employee-paid portion or the employee and employer-paid portion. Normally employees provide post-dated cheques for this purpose.
Organizations need to apply a consistent policy regarding whether benefits are employee- or employer-paid during a leave.
If an employee decides to maintain benefits, it is important to note that insurers set different parameters. For example, some carriers allow individual plan members to pick and choose which benefits to maintain, while others have an “all or none” policy.
Risk of Not Maintaining Benefits
Many employees elect to terminate benefits for temporary leaves – unless the employer is paying for premiums of course! But plan members should be made aware of the risks associated with terminating benefits for a temporary leave.
Benefits plan provisions include pre-existing condition limitations for benefits such as critical illness or long term disability benefits. When benefits are terminated – even for a temporary leave – pre-existing condition limitations are reset. The following Benefits in Action scenario illustrates how this risk works.
Benefits in Action
Jody was excitedly expecting her first child and had made plans with the benefits administrator at her firm on the first day of her leave. Because Jody’s spouse had a generous plan with his employer, Jody decided that she didn’t want to keep her company’s plan.
Unfortunately, shortly after returning to work a year later, Jody was diagnosed with breast cancer. Despite debilitating chemotherapy treatments, her claim for both critical illness and long term disability benefits were declined.
Investigations for breast cancer had begun during her maternity leave, and consequently, Jody was deemed to have a pre-existing condition. Depending on the contract, illnesses under treatment or investigation 3 to 6 months prior to coverage taking effect.
Illnesses and injuries diagnosed during the leave would also not be eligible for a claim.
Please contact us if you have any questions about your contract and how maternity or parental benefits should be handled.