FMLA2006-6-A — Dental insurance plan as a group health plan and continuation of benefits for instructional employees during summer vacation

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

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October 5, 2006 FMLA2006-6-A

Dear Name*:

This is in response to a letter on behalf of a local union representing teachers (the Union), a similar letter
on behalf of the respective school district (the District), and a question raised during a follow-up telephone
conversation between the Union and a member of my staff. Both the Union and the District have
requested an interpretation regarding the application of the Family and Medical Leave Act of 1993
(FMLA), 29 U.S.C. § 2601 et seq.,
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to a group dental plan provided by the District to employees who
belong to the bargaining unit served by the Union. The Union, in a telephone conversation with a
member of my staff, has also requested clarification regarding the application of the FMLA regulations at
29 C.F.R. § 825.601(a) to the maintenance of dental health benefits over the summer vacation for
instructional employees who take FMLA leave at the end of the school year. For the sake of clarity, this
letter responds to the requests from both the Union and the District.

The letters sent by the Union and the District and subsequent telephone conversations provide the basis
for the following assumptions that we have used in answering this inquiry. The District offers a group
health insurance plan that provides medical care coverage for instructional employees and separately
offers a group dental insurance plan for these employees. The District pays 100% of the dental insurance
premiums up to a maximum amount per month for 12 months, although the teachers’ work year starts in
late August and ends in early June.

We also assume, based on representations made by both the District and the Union, that the medical
health plan is a group health plan benefit that must be maintained during FMLA leave. The Union
believes that the dental plan is also a group health plan that must be maintained during FMLA leave;
however, the District believes that the dental plan is not a group health plan under the FMLA. The District
argues that the dental plan is not a part of, or a supplement to, its “group health plan,” but rather, is a
separate group dental program. Therefore, the District does not maintain the dental insurance coverage
for employees during FMLA leave or during summer break if FMLA leave is taken near the end of the
school year.

The FMLA refers to section 5000(b)(1) of the Internal Revenue Code of 1986 (the Code) for the definition
of the term “group health plan.” See 29 U.S.C. § 2614(c)(1). Section 5000(b)(1) of the Code states:

The term “group health plan” means a plan (including a self-insured plan) of, or
contributed to by, an employer (including a self-employed person) or employee
organization to provide health care (directly or otherwise) to employees, former
employees, the employer, or others associated or formerly associated with the employer
in a business relationship, or their families.

The District’s dental plan indicates that it pays percentages of the treatment cost for dental care for plan
participants (District employees), including diagnostic and preventive oral services, basic dental services,
endodontics, periodontics, oral surgery, major restorative services, prosthetic repairs and adjustments,
prosthetics, and orthodontics. The plan appears to come within the broad definition of “group health
plan.”

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Unless otherwise noted, any statutes, regulations, opinion letters, or other interpretive material cited in this letter
can be found at www.wagehour.dol.gov.

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

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Pursuant to the regulations at 29 C.F.R. §§ 825.800 and 825.209(a), an insurance program providing
health coverage under which employees purchase individual policies is excluded from the FMLA
definition of a “group health plan” if:

(1) the employer makes no contribution to the plan;
(2) participation in the program by employees is completely voluntary;
(3) the sole functions of the employer with regard to the program are, without endorsing the
program, to permit the insurer to publicize the program to employees, to collect premiums
paid by the employees through payroll deductions and to remit these premiums to the insurer;
(4) the employer receives no consideration in cash or otherwise in connection with the program,
other than reasonable compensation for administrative services; and
(5) the premium charged to the employee does not increase in the event the employment
relationship ends.

In a telephone conversation with a member of my staff, counsel for the District has stated that the
District’s dental insurance plan is a benefit provided by the District to both union and non-union
employees and that the plan is self-insured. The District negotiates a contract with another organization
to serve as the plan’s third party administrator. Plan premiums are negotiated based, in part, on a review
of past claims. The District generally pays 100% of insurance premiums and employs a plan
administrator who assists employees in the handling of disputed claims. The District may grant
exceptions for a claim that is denied by the plan administrator.

The disputed dental plan provides for dental health care and, as previously stated, appears to come
within the Code’s broad definition of “group health plan.” The summary plan description the District
provides describes the plan as a group benefit plan. The information provided to us indicates the plan
would not meet certain FMLA regulatory criteria for exclusion from the definition of a group health plan.
Specifically, employees do not purchase individual policies under this plan, and the District contributes
100% of the plan premiums. In order to qualify for the exclusion, however, employees would need to
purchase individual policies, and the employer could not contribute to the plan. With respect to the
employer’s functions under the plan, the District’s negotiation for the cost of premiums and the
employment of a claims administrator to assist employees in handling disputed claims goes beyond the
employer involvement allowed for a plan that meets the exclusion. The District’s authority to grant
exceptions for denied claims also would be in excess of the involvement an employer could have under a
plan meeting the regulatory exception. See 29 C.F.R. § 825.209(a).

Because the plan description submitted by the Union and the District does not qualify for the exception
listed in 29 C.F.R. § 825.209(a), the District, as the employer, must conform to the regulations governing
group benefit plans. The FMLA regulations at 29 C.F.R. § 825.209(b) state that the same group health
plan benefits provided to an employee before taking FMLA leave must be maintained during the FMLA
leave. Similarly, “benefit coverage during FMLA leave for medical care, surgical care, hospital care,
dental care, eye care, mental health counseling, substance abuse treatment, etc., must be maintained
during leave if provided in a group health plan, including a supplement to a group health plan.” 29 C.F.R.
§ 825.209(b). The dental care plan meets the definition of a group health plan, just as the medical health
care plan meets that definition.

We believe that, in order to comply with the FMLA, the District must maintain the dental insurance
coverage for employees who take FMLA-qualifying leave. See 29 U.S.C.
§ 2614(c)(1). The District may be interpreting “group health plan” to mean a “major medical plan.” The
FMLA and its regulations require employers to maintain any “group health plan” coverage “on the same
conditions as coverage would have been provided if the employee had been continuously employed
during the entire leave period.” 29 C.F.R. § 825.209(a); 29 U.S.C. § 2614. The Department interprets
this to mean that all “group health plans” provided by FMLA-covered employers to FMLA-eligible
employees must be maintained during FMLA-qualifying leave. Therefore, we must conclude that the
District is required to maintain coverage under its group dental care plan for employees on FMLA leave
as though the employees were continuously employed during the period of FMLA leave.

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

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With regard to the Union’s question concerning FMLA leave by instructional employees near the end of
the school year, the regulations at 29 C.F.R. § 825.601(a) require that instructional employees on FMLA
leave at the end of the school year must be provided with any benefits over the summer vacation that
employees would normally receive if they had been working at the end of the school year. This means
that all benefits, including the group dental plan benefits discussed above, must be provided to those
instructional employees on FMLA-qualifying leave at the end of a school year.

This opinion is based exclusively on the facts and circumstances described in your request and is given
based on your representation, express or implied, that you have provided a full and fair description of all
the facts and circumstances that would be pertinent to our consideration of the question presented.
Existence of any other factual or historical background not contained in your letter might require a
conclusion different from the one expressed herein. You have represented that this opinion is not sought
by a party to pending private litigation concerning the issue addressed herein. You have also
represented that this opinion is not sought in connection with an investigation or litigation between a client
or firm and the Wage and Hour Division or the Department of Labor.

Sincerely,

Paul DeCamp
Administrator

*Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C. 552 (b)(7).