Your Employees' Rights to Health Coverage During and After Military Service
Employers that provide employee health coverage have special obligations to employees who take leave to serve in the military. Employers must offer employees on military leave the opportunity to continue their health coverage during all or a portion of their leave. If the employee declines coverage during leave, the employer must offer to reinstate coverage if the employee returns to employment after leave ends within the time frame prescribed by law. To avoid potentially adverse consequences, employers should establish procedures to permit employees to elect and pay for health continuation coverage and include those procedures in the health plan's summary plan descriptions and employee notices.
Obligation To Offer Coverage
An employer's obligation to offer health continuation coverage to employees taking leave for military service derives from the Uniformed Services Employment and Reemployment Rights Act ("USERRA"). The coverage that must be offered is similar, but not identical, to COBRA continuation coverage. The major differences in the two coverages are described in the chart below.
|
USERRA |
COBRA |
| applies to most employers | does not apply to governmental employers or small employers with fewer than 20 employees |
| only the employee may elect continuation coverage for his covered family members; covered family members do not have a separate right to elect continuation coverage | employee and each covered family member have a separate right to elect continuation coverage |
| maximum coverage period is 24 months | maximum coverage period is 18, 29 or 36 months, depending on circumstances |
| employee's premiums for continuation coverage for military leave of less than 31 days cannot exceed what would have been the employee's premiums for regular coverage for the same period had the leave not been taken; for military leave longer than 30 days, employee's premiums can be 102% of cost of coverage | employee's premiums for continuation coverage for entire coverage period can be 102% of cost of coverage |
| not available to covered retirees | available to covered retirees |
| employer may develop its own notice, election and premium payment procedures | employer must follow prescribed notice, election and premium payment procedures |
Obligation To Reinstate Coverage
If the employee returns to employment within the time frame prescribed by law, the employer must reinstate the employee's pre-leave health coverage. The employer cannot impose a waiting period or apply a preexisting condition exclusion period to the reinstated coverage. However, there is an exception to these general prohibitions for certain illnesses or injuries determined to have been incurred or aggravated during military duty.
Reasonable Administrative Procedures
Employers may develop their own procedures for administering USERRA continuation coverage. If an employer does not develop its own procedures, it may suffer certain adverse consequences. For example, if an employee takes military leave without electing USERRA continuation coverage, the employer may terminate his health coverage. However, the employer must retroactively reinstate the coverage if the employee later elects it during the "election period" and pays the premiums for it. The election period ends at the end of the USERRA continuation coverage period (the shorter of 24 months or the end of the military leave) unless the employer has adopted a reasonable election procedure that calls for a shorter election period. Alternatively, if an employee elects USERRA continuation coverage but fails to pay for it, the employer may have to bear the financial consequences if it cancels the coverage in the absence of an established reasonable procedure for timely payment of premiums and cancellation of coverage.
To avoid these consequences, employers should consider establishing and adopting reasonable procedures for administering USERRA continuation coverage. These procedures may be similar to those for administering COBRA coverage. The procedures should be set out in writing in the summary plan description for the employer's health plan, and reflected in existing COBRA notices or in separate USERRA notices.