Can an employer terminate or reduce employees’ health benefits?

Employers offer health benefits on a voluntary basis.  Federal law does not require employers to offer health coverage to their employees nor does it prevent employers from cutting or reducing benefits in many instances.  Employees and their families may have a right to continuation coverage under COBRA if the plan still exists and may have a contractual right to coverage if, for example, benefits are required under a collective bargaining agreement.  In addition, a plan cannot deny eligibility or continued eligibility based on health status.

Under the Family and Medical Leave Act (FMLA), eligible employees are entitled to the continuation of group health insurance coverage during any period of FMLA leave under the same conditions as coverage would have been provided if the employee had been continuously employed during the leave period.  Employees may contact the Department of Labor’s Wage and Hour Division (1-866-487-7243) for information on the FMLA.

Employees may contact one of EBSA’s benefits advisors at 1-866-444-EBSA (3272) or online at: http://www.dol.gov/ebsa/contactEBSA/consumerassistance.html

Note: As an overall matter, employers should be guided in their relationship with their employees by federal, state, and local employment law, and by the company-specific application of these laws as reflected in employee handbooks, manuals, and contracts (including bargaining agreements).

Not all of the employment laws referenced apply to all employers or all employees, particularly state and local government agencies.  For information on whether a particular employer or employee is covered by a law, please use the links provided for more detailed information.  This information is not intended for federal agencies or federal employees -- they should contact the U.S. Office of Personnel Management (OPM) for guidance.

Last Reviewed: 02/06/2012

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• Workplace Questions
  • Workplace Benefits
    • Health Benefits, Health Plans, Health Insurance