How to Get Paid While on FMLA

Health and family may be top priorities for you, but you also have to balance those with the reality of having bills to pay. So while you’d be there in a heartbeat to care for your family, you’ve also got to keep your livelihood in view. But here’s the good news: You don’t have to choose between the two thanks to a federal law passed in 1993 called the Family and Medical Leave Act (FMLA).  

According to the Family and Medical Leave Act, most employers in the U.S. are required to give employees up to 12 weeks off work—without their job status being impacted—to manage a serious health condition or to care for a loved one with a serious health condition. The downside? The leave is unpaid.  

But even though you may not be getting paid through your employer, there are ways you’ll be able to earn an income while you focus on health and family. Here we’ll share information about how FMLA works and ways you can cover a gap in income. The secret is planning ahead.  

How does FMLA work? 

FMLA is designed to give employees the time they need to deal with a medical condition or care for loved ones without sacrificing their jobs. When you take FMLA leave, your employer is required to hold your job (or a similar job) for up to 12 weeks and continue to offer you the same medical benefits you received prior to your leave. You’re able to take care of what you need to in your personal life knowing that your healthcare needs are covered, and your job will be waiting for you when you return.  

What are the rules around FMLA?  

FMLA regulations apply to companies with 50 or more employees, schools (both public and private) and public agencies. To be eligible for FMLA leave, you will need to have worked for an employer for the last 12 months, and over those 12 months you need to have worked for at least 1,250 hours (which comes out to about 24 hours per week). FMLA leave can be taken for any of the following reasons:  

• To manage a serious health condition that limits your ability to work  

• For the birth and care of a new child (including adoption or foster care) 

• To care for an immediate family member (spouse, child or parent) with a serious health condition 

• For reasons relating to a family member’s military service (reasons related to a family member’s deployment or to care for a recent veteran with a serious injury) 

Typically, the 12-week leave is taken all at once, but depending on your circumstances, you could be eligible to take your leave by reducing your daily work hours or breaking it into separate blocks of time. 

When you return to your job, your employer is required to allow you to return to your same job or an equivalent job at the same level with equivalent pay, benefits, schedule and work terms. The only exception is if you are a highly-paid, salaried employee whose role the business couldn’t operate without. In that case, your employer may not be required to reinstate you at the same job upon your return (a rare circumstance).  

What is the difference between FMLA and maternity leave?  

Maternity leave—or taking time away from work to have and care for a new child—falls within FMLA, but FMLA includes more than just maternity leave. FMLA leaves can also include situations like having a surgery that requires a long recovery, recovering from an injury or caring for a parent with a terminal illness. There are many reasons you can take FMLA leave, and maternity leave is one of those reasons.  

More and more employers are also beginning to offer paid maternity (and paternity) leave, so it is also possible that a maternity leave could be paid, whereas a leave under FMLA is unpaid. 

How to get paid while on FMLA  

Though your employer is not required to pay you during an FMLA leave, there are other options you can take advantage of that will allow you to recoup some of your lost income during a leave.  

Employer benefits 

Your employer may not offer paid leave for your situation, but it may offer other benefits that can help cover your time away from work, including:  

PTO and other paid leave 

With an FMLA leave, many people will first exhaust any outstanding paid time off, like sick time, vacation time or other paid leave, before looking to other resources for income. Some employers will even let you roll over paid time off from year to year, so if your leave is for something you’re able to plan for—like a planned elective surgery or the birth of a child—you may consider starting to save up some of your PTO. 

Disability insurance 

Short-term disability insurance is typically available as part of a compensation package—either as part of your standard benefits or as an available add-on to purchase through your employer. Depending on your plan, short-term disability could help cover 50 to 100 percent of your income if you become disabled and are unable to work.  

If your condition turns into something more serious that will last more than the 12-week FMLA period, long-term disability insurance may cover you for a longer period of time. Many employers also ofter long-term disability insurance as part of a benefit package, but it’s not always enough to fully cover your financial needs. A Northwestern Mutual financial advisor can help you understand how much disability insurance you need and options available to you. 

Workers’ compensation 

If the reason you need to take time away from work is because of something that happened at work (like you got injured on the job or you contracted a serious illness from your workplace), you may be able to receive some compensation through third-party insurance offered by your employer. Workers’ compensation benefits are offered at the state level, so specifics of what you'd be eligible for would depend on what state you live in, who your employer is and the nature of the work you do.  

Reserves you’ve built  

Planning ahead for unexpected time off of work will benefit you in the long run, because it’ll give you time to put resources in place that you can access down the road if you need to. Some resources you put in place might include the following:  

Emergency savings 

At any given time, you’ll want to have somewhere between three and six months’ worth of living expenses that you can access from an emergency fund. If you’re faced with a situation that requires you to take time away from work without pay, you’ll have a cushion to help you cover lost income in the short term without impacting your long-term goals.  

Life insurance cash value  

If you’ve got a permanent life insurance policy, you’re accruing cash value that can be accessed if you need it. You can take a loan from your cash value for any reason at any time. Keep in mind, though, that if you do not pay back the amount you borrow from your cash value, you’ll reduce the death benefit on your policy until you pay it back. So if you’re looking for temporary financial coverage, you’ll want to make sure you have a plan to pay back your cash value once you’re back at work.  

Retirement savings 

Accessing retirement savings from your 401(k) or IRA is an option if you’ve exhausted all other resources and are still coming up short, but this should be a last resort. There are two ways you can access your retirement savings: taking a loan or making a hardship withdrawal.  

With a 401(k) loan, you borrow money from your retirement savings account. Depending on what your employer’s plan allows, you could take out as much as 50 percent of your savings up to a maximum of $50,000 within a 12-month period. In most cases, the money you took—plus interest—has to be repaid within five years of taking your loan. Your plan’s rules will also set a maximum number of loans you can have from your plan at the same time. (You may also need consent from your spouse/domestic partner to take a loan.)  

The IRS also allows penalty-free withdrawals, or “hardship withdrawals,” from your qualified retirement accounts to cover emergency expenses, if needed. This exception only waives the 10 percent early withdrawal penalty—not taxes you may owe on the withdrawal. Again, this option should be a last resort, as withdrawing funds can impact your potential growth and total savings amount.  

Government assistance programs 

There may also be some state and federal resources available to you to help cover expenses in your time away from work.  

Temporary Disability Insurance  

Depending on where you live, you may be able to receive income from your state during FMLA leave. There are currently six states that offer short-term income replacement programs: California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island.  

Food assistance programs 

The Supplemental Nutrition Assistance Program (SNAP) through the U.S Department of Agriculture can support low-income families with funds to buy food (sometimes referred to as “food stamps”). To be eligible to receive benefits, your annual household income must fall below a certain amount.  

Special Supplemental Nutrition Program for Women, Infants, and Children  

Women using FMLA for a birth who have a limited income might be eligible for additional support through Women, Infants and Children (WIC) including supplemental food supplies, education, counseling, access to health screenings and referrals and access to social services. Women who are pregnant, breastfeeding or who have just given birth are eligible to apply through their state office.  

Making sure you’re covered financially  

It can be really difficult to plan ahead for a leave you don’t know you’ll need in the future, but putting safeguards in place for yourself to cover unexpected unknowns in the future is really the best way to make sure you’re covered when things take a turn.  

Protecting your income is a fundamental part of financial planning and one that a financial advisor can help you with. A financial advisor can look at your monthly budget and long-term savings goals to help you determine how much coverage you’ll need if you’re no longer able to earn an income. 

Whether it’s budgeting for your short-term FMLA leave or putting long-term safety nets in place, a Northwestern Mutual financial advisor can help you create a plan that keeps your financial goals on track—even if you have to hit pause on your primary income stream for a while.  

Disability income insurance policies contain some contractual features and optional benefits that may not available in all states. The ability to perform the substantial and material duties of your occupation is only one of the factors that determine eligibility for disability benefits. These policies also contain exclusions, limitations and reduction of benefit provisions. Eligibility for disability income insurance, additional policy benefits and qualification for benefits is determined on a case-by-case basis. For costs and complete details of coverage, please contact a Northwestern Mutual Financial representative. 

The primary purpose of permanent life insurance is to provide a death benefit. Utilizing the cash value through policy loans, surrenders, or cash withdrawals will reduce the death benefit; and may necessitate greater outlay than anticipated and/or result in an unexpected taxable event. 

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.   

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Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life insurance, disability insurance, annuities, and life insurance with long-term care benefits)

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