Unfortunately, they probably can cancel your medical insurance, unless there's something written into the terms of the medical plan (or maybe the disability plan) saying otherwise. Some plans specifically say that you are allowed to continue your medical insurance on disability, but most don't. If the terms of the plan don't require them to let you keep your medical insurance, then there's no law that says otherwise. You would still have the right to continue your benefits under COBRA, but that would be all. The only way to know for sure is to get a copy of your medical plan and disability plan documents from your employer, and see what they say. If you see something different from what they're telling you, then point that out to them. If that doesn't change their minds, you should talk to an attorney.
Please call our firm at 1-866-959-5362 if you would like to discuss your case in more detail. The answers I provide on Avvo.com are for information purposes only, and should not be relied on as legal advice. This answer does not create an attorney-client relationship between us.
The 90 days of medical coverage that you were given may relate to your rights under the Family and Medical Leave Act. The FMLA provides that you are entitled to 12 weeks of protected unpaid leave due to your own disability. The law also requires that your employer continue your normal employee benefits during your 12 weeks of leave. At the expiration of those 12 weeks, you employer can discontinue your benefits. Also, you should be aware that after 12 weeks your employer may be able to terminate your employment. If you think you may be out of work for more than 12 weeks, you should speak with a local employment attorney right away.