Employees on Military Leave Due Benefits

Employers’ obligations with regard to health benefits for employees on military leave are governed by the Uniformed Services Employment and Reemployment Rights Act (USERRA).

USERRA provides that employers must continue benefits for persons on military leave similar to the type of continuation rights provided by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Specifically, if an employee’s health plan coverage would terminate because of an absence due to military service, the employee may elect to continue coverage for the shorter of:

1. the 24-month period beginning on the date on which the employee’s absence begins, or
2. the period beginning on the date on which the employee’s absence begins, and ending on the date that the employee fails to return to the job or apply for reemployment.

A requirement of USERRA is for an employer to “provide to persons entitled to rights and benefits under this chapter a notice of the rights, benefits, and obligations of such persons and such employers under this chapter. The requirement for the provision of notice under this section may be met by the posting of the notice where employers customarily place notices for employees.” Not to replace posting of the notice, but other means of communicating USERRA rights to employees is through written employment policies and employee handbooks.

If the employee fails to elect continuation of coverage, the employer can cancel the employee’s coverage while the employee is on military leave. Specifically, an employer may cancel the coverage of an employee who gives advance notice of his/her military leave and who does not elect continuation coverage. In this situation, there are also specific provisions governing the circumstances under which an employer must permit retroactive reinstatement of coverage.

Employees are required to pay varying amounts to keep their coverage. If the employee’s absence is 30 days or less, the employee cannot be required to pay more than the ordinary employee share, if any, of maintaining coverage. If the period of absence is 31 days or more, he or she may be required to pay up to 102% of the full premium to continue coverage. The payment obligation begins on the first day of continuation coverage. The employer may cancel the coverage of employees who do not make timely payment of their portion of the premium.

A person reemployed under USERRA is entitled to seniority and other rights and benefits determined by seniority that the person had on the date of the commencement of service in the uniformed services, plus additional seniority and rights and benefits that such person would have attained if the person had remained continuously employed. Additionally, on the employee’s return from military service, his/her health insurance coverage must be reinstated without any waiting period or exclusions for preexisting conditions, other than waiting periods or exclusions that would have applied even if there had been no absence for uniformed service. According to the Department of Labor, this rule does not apply to coverage of any illness or injury determined by the Secretary of Veterans Affairs to have been incurred in, or aggravated during, performance of duties in the uniformed service.

Mike Lissau contributed his expertise to this article. He is an employment law expert with Hall Estill. You can reach him at mlissau@hallestill.com.