Under the applicable federal regulations, an employer is allowed to terminate the health insurance benefits of an employee who has failed to pay his or her fair share during an FMLA leave. However, the regulations require for such premium payments to be more than 30 days late, and the employer has to give the employee at least a 15-day prior notice of cancellation.
Should the employee return to work, however, the employer is required to restore the health insurance benefits. The employer may then try to collect any outstanding balance from the employee, but the employee would be entitled to continue as a member of the benefits plan.