Is there a requirement for employers to continue to provide health benefits at the employer's cost where the employee is on an employee-initiated leave of absence?

Only if the leave is an approved Family and Medical Leave Act leave of absence. Otherwise, unless the plan provides for coverage during leaves of absence (a 30-day leave is pretty standard, but I've seen as long as twelve months), the employee will have to elect COBRA if he or she wants to keep their coverage.
Employers should *never* carry employees on their bill who are otherwise ineligible for coverage, even as an act of goodwill towards a valued employee. If the employer wants to continue to provide coverage, they should term the employee, pay the employee's COBRA premiums, and bring them back on the plan when they return.

Josh:

Don't get confused. FMLA only requires the employer to allow the employee to continued medical/Dental coverage on the same basis as active employees, not totally at the employer's cost. However, if your employer is paying 100% of the active employee's coverage, then an employee on a qualified FMLA leave must have coverage continued at the employer's cost. If there is an employee contribution, then the employee must pay his/her contrubution during FMLA leave.

Were the code of federal regulations amended in 1998 in connection with the federal family leave act. If so, which part of the CFR (i.e. section 825) Thanks.