With thousands of workers returning from active military duty, it’s a great time to review federal law regarding the treatment of benefits for employees who served our country. The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) allows a worker on military leave of absence to receive certain rights while on leave and to return to work upon his homecoming. It also expands this right for up to five years. Working and serving in any of these areas is incredibly appreciated, no wonder coast guard flags and navy flags are flown outside homes and businesses to show support and connection to those who serve. That is why these services have rights under the law to help them with benefits, etc.
Whether enlisted in the Army, Navy, Marine Corps, Air Force, or Coast Guard, those called up for military duty are covered by USERRA. Coverage is also extended to the National Guard, Public Health Service Commissioned Corps, and all reservists. In fact any military duty-including commissioned or non-commissioned and both voluntary and involuntary obligation-is within the scope of USERRA.
What Steps Are Required
by the Employee?
While USERRA does not provide a model form or process of notification for employers, an employee or military representative should provide the employer with written or oral notice upon notice of military duty.
Employees as well as their covered dependents are entitled to COBRA-like continuation of health coverage. And, just like COBRA continuation coverage, an employee may be asked to pay up to 102 percent of the group rate. This includes the right to continued coverage in a health flexible spending account (FSA) portion of an employer’s Section 125 cafeteria plan. The right to continuous coverage must be extended until the end of an employee’s leave or for 18 months, whichever comes first.
USERRA doesn’t specifically address how health FSA benefits and elections should be treated during a covered leave. Thus, many employers turn to the Family and Medical Leave Act for guidance. Among other options, an employee may revoke election for the period of leave and immediately be reinstated in the health FSA upon returning from military service.
The Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008 gives military personnel expanded benefits and access to the money they have set aside for retirement or contributed to a health FSA plan. The Act ensures that the most generous interpretations are used so that plans can provide special advantages for military personnel. See my March 2011 article (HEART Act of 2008-Benefits for Military Personnel) for more information on the HEART Act.
What Steps Are Required
by the Employer?
Generally, USERRA applies to all public and private employers of any size and covers any full-time worker. Part-time workers are not covered.
The employer provides a COBRA-like form to all employees going on military leave. If the employee is gone less than 31 days, the employer must continue to pay its share of any health insurance benefit. If the leave is for more than 31 days, the covered employee, dependents and spouse may continue health coverage for up to 18 months by making required contributions.
Current benefits provided to employees who are on any type of leave of absence also must be provided to those on military leave and their dependents. Like COBRA, USERRA’s continuation requirements allow employees to continue health coverage for the lesser of 18 months from the day the uniformed service leave begins or for a period beginning on the day the leave begins and ending on the day after the employee fails to return to or reapply for employment. USERRA leave is a qualifying event under COBRA; therefore, COBRA extensions will apply.
Only public employers are required to continue paychecks for any part of military leave. Private employers may grant annual leave, with or without pay. Some employers continue the pay for an employee on military leave through all or part of the leave. In the case of active duty leave, many employers adopt a policy of paying the difference between civilian pay and military pay.
Employers may not deduct from an employee’s annual vacation leave while on military duty, unless the employee agrees to that type of arrangement. USERRA is in addition to other types of leaves or excused absences such as sickness or vacation leave and is intended to be additional time off.
Upon Return from Military Duty
Upon an honorable discharge or return from active duty, an employee must ask for his employment position back within a specified timeframe-ranging from 8 hours to 90 days after returning from duty, depending on the entire length of service. If the military leave involved an absence of more than five years, USERRA rights generally won’t apply.
After returning from duty, an employee must be reinstated to the health plan without waiting periods, limitations or other exclusions, even if such return is after an 18-month continuation coverage period. The reinstatement must be without exclusions for preexisting conditions or a waiting period. However, there may be exclusions for injuries or illnesses incurred during the covered service, barring any health care reform regulations to the contrary.
An employee must be reinstated to the same or similar employment position. Generally, the USERRA-designated leave won’t be considered a break in service for purposes of vesting and accrual of benefits in a qualified pension/retirement plan. Special provisions contained in the pension/retirement plan should allow individuals to make up contributions missed during the leave period.
Review of Section 125
Cafeteria Plan Requirements
The final Section 125 Family and Medical Leave Act (FMLA) regulation provides three ways to handle employee premium obligations during leave:
• The prepay option allows employees to prepay contributions for the period of time they expect to be on leave. This option may not work in situations where an employee is called to active duty with very short notice.
• The pay-as-you-go option permits employees to elect to pay the cost of coverage during the leave. Contributions can be paid with after-tax dollars or pre-tax dollars to the extent that an employee receives compensation during the leave.
• The catch-up contribution option is when an employer pays both the employer share and employee share of the cost of coverage during the leave. Then, an employee repays the employer upon returning to work.
Employers may allow any of the above three methods to be used by employees on military leave. However, they cannot just provide for a prepay option, and other forms of employer-provided leave must be treated comparably.
Finally, to administer a health or 125 plan according to USERRA regulations, the employer needs to make sure they:
• Coordinate coverage with CHAMPUS (Civilian Health and Medical Program of the Uniformed Services).
• Review and update any leave-of-absence policies, including a review of procedures for handling 125 plan status changes and extension of benefits during leave.
• Ensure COBRA procedures comply with USERRA.
• Keep documentation of all employees’ benefits utilized under USERRA.
• Maintain information in writing that clearly states all employee benefits, rights and obligations.
Useful Websites
Many different agencies with website access have information about USERRA. Here are a few to check out:
• www.access.gpo.gov provides regulations about employment rights, restoration to duty and COBRA.
• www.dol.gov is a gateway to the Department of Labor site.
• www.esgr.org contains USERRA facts in a question-and-answer format for both employees and employers.
• www.tricare.osd.mil includes data about military health coverage.
The information contained in this article is not intended to be legal, accounting, or other professional advice. We assume no liability whatsoever in connection with its use, nor are these comments directed to specific situations.
