An employee who has worked slightly less than 12 months is out on short-term disability leave. During this time, the employee is offered COBRA. A short time later, the employee reaches the 12 months of employment required to be eligible for FMLA. In this situation, is the employer required to pay any part of the employee’s medical coverage while on FMLA? Or, since the employee was offered COBRA prior to being eligible for FMLA, is the employer only required to return the employee to the same or similar position and not required to do anything with the medical insurance? Any thoughts?

The 12 month rule when it comes to FMLA counts time actually worked, not length of employment. Therefore, if this employee has not been working at all (total disability), he or she would not be eligible for FMLA and you have no predicament.