New Law Adds Obligations for Employers with Employees in Military Service

On December 10th, the President signed into law the Veterans Benefits Improvement Act (Public Law 108-454). That Act amends the Uniformed Services Employment and Reemployment Rights Act (known as "USERRA") in two ways that have significance to employers whose employees have been called to military service.

Continued Health Plan Coverage Must be Offered for 24 Months

USERRA contains a requirement that eligible employees who are called to military service must be allowed to continue health coverage for themselves and their covered dependents under the employer's plans, at the employee's expense. In the past, this requirement applied for up to 18 months, which corresponded to the COBRA continuation period. The new law extends that period from 18 months to 24 months. ("Health plans" for this purpose include all of your plans that are subject to the COBRA requirements, including medical, dental and vision plans.)

The extended continuation period is effective for elections made on or after the date of enactment, which was December 10, 2004. Thus, employers need to modify their health plan administration immediately to offer employees entering military service and their dependents the longer period of coverage. Any employee in military service who elected to continue your health coverage on or after December 10th should also be notified of the extension. If you use a third-party administrator or an insurance company to administer your health plans, you should contact them promptly to make sure they are complying with this new requirement.

Notice of USERRA Rights and Duties

The new law also adds a requirement that each employer must provide to employees entering military service covered by USERRA a notice "of the rights, benefits, and obligations of such persons and such employers" under USERRA. This requirement can be met by posting a notice in the locations where you customarily place notices to employees.

The notice requirement is effective 90 days after enactment of the Act (i.e., March 10, 2005). The Secretary of Labor is directed to provide the text of the notice to employers by that date.