Adding a health attribute modifier to a piece of armor works as it should until the armor is removed, at which point the health boost remains in place, even though the health bar returns to normal.

http://www.youtube.com/watch?v=vPr41jRoH_M&feature=youtu.be
The health goes from 20 to 40 with the first set of armor, then back to 20 from the fall damage. The second set takes it to 30, and again, the only thing that removes the excess health is fall damage.