A gap that existed in California law concerning continuation of health insurance coverage during maternity leave has now been filled by the California legislature. Effective January 1, 2012, health insurers will be required to cover maternity benefits and employers who had been required to continue health insurance during a maternity leave covered by the Family and Medical Leave Act (FMLA) will now be required to continue that coverage for the full four month maternity leave of absence permitted by the California Pregnancy Disability Act.
Both federal and California law allow an employee of a covered enterprise to take up to 12 weeks leave of absence per year for, among other things, their own serious health condition. The U.S. Family and Medical Leave Act (FMLA) entitles an employee to use those 12 weeks for maternity leave and the employer is required to keep in force, at its cost, any health insurance to the same extent it is provided while the employee is working. The California Family Rights Act (CFRA) is mostly identical to FMLA except the California law also includes the Pregnancy Disability Act (PDA) which allows an employee to take a leave of absence because of pregnancy, childbirth or related condition for the period of disability up to a maximum of four months. PDA is silent on the subject of health insurance continuation but FMLA requires that the insurance be kept in force for the first 12 weeks of such leave. CFRA leave need not be taken for maternity purposes because PDA independently provides for leave of up to four months.
As a result of this overlay of state and federal law, employers technically have not previously been required to continue health insurance during maternity leave for weeks 13 through 16. This all changes on January 1, 2012, as PDA will be amended to require employers to continue paying for health insurance for an employee on maternity leave for the whole period of disability up to a maximum of four months to the same extent the employer pays for health insurance while the employee is working.
At the same time, the legislature has amended the California Insurance Code to require health insurers to cover maternity.
Whether this new law will significantly impact health insurers remains to be seen as is the question of whether the new law will have a significant impact on health insurance premiums. It is questionable whether the PDA amendment will have a significant impact on California employers; in our experience most employers have kept the health insurance in effect throughout the four months of maternity leave in any case. If you have questions about these new laws we encourage you to check with your labor employment relations legal counsel.