Wirtz Law Blog

When employees take a leave of absence for military service, they are entitled to continue the health plan provided by their employer pursuant to two relevant statutes.[1] The Uniformed Services Employment and Reemployment Rights Act (USERRA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA) statutorily mandate employers to continue the current employment-based health care plan.[2] The statutes differ somewhat in their terms for continued coverage.[3] COBRA applies to all employees whereas USERRA tramadol applies only to military personnel.[4] Because of the existence of the two statutes governing continued health care, military servicemembers enjoy a unique right to choose which statute they would like to control the terms of their continued health plan. It is the employer’s responsibility to provide both options to the military employee.[5]

Both acts provide for the same coverage for the first 31 days of the absence.[6] In that first 31-day period, the employer must continue to pay the portions of the premiums they were responsible for while the service member was employed. [7] In other words, if the employer subsidized the entire premium of the employee, they must continue to do so for 31 days. However, if the employer only paid 70% of the premium, and the employee provided the other 30% during their employment term, then the employer need only pay 70% of the premium for the first 31 days. After that 31-day period, the service member may elect to continue coverage either under USERRA or COBRA.[8] Both of those acts cap the maximum payment by the employee at 102% of the total premium rate for each period, which is generally one year.[9]

Several differences between COBRA and USERRA will affect the employee’s decision of which statute they would like to protect their continued health plan. The first and generally most compelling difference is that COBRA only applies to employers with 20 or more employees, whereas USERRA applies to all employers.[10] Thus, an employee on military leave from an employer with less than 20 employees will be forced to continue health care pursuant to USERRA.

Another motivating consideration is that the duration of the continued health plan differs under the two statutes. Under COBRA, members are entitled to up to 18 months of coverage.[11] USERRA, however, requires coverage for up to 24 months, or the duration of their service, whichever is lesser.[12] Thus, the time of coverage under USERRA may be greater than COBRA, if the service is for 24 months or longer. Or it may be lesser than COBRA when the length of service is less than 18 months.

One significant advantage of COBRA is that it provides coverage to the employee’s dependents,[13] while USERRA only covers the individual service member. [14] Under USERRA, only the service member has the right to elect the continued coverage, and it does not extend to the service person’s dependents.[15] In order to cover dependents under the employer’s plan, one would have to elect COBRA.

Other technical differences exist, such as the respective treatment of other group health plans. USERRA applies to a Flexible Spending Account (FSA), just as it would any other group health plan.[16] However, COBRA has special rules concerning FSAs. Such continuation coverage generally does not have to be provided until the end of the plan year in which a COBRA qualifying event occurs, and sometimes not at all.[17] Thus, USERRA continuation coverage requirements could apply to a health FSA for a much longer time than COBRA.

Different premium requirements apply to periods of disability claimed under the continuation period. Under COBRA, a service person may extend the coverage due to disability for up to a total of 29 months.[18] After the first 18 months, however, and until the end of the 29th month, the service member can be charged up to 150% of the premium, rather than 102%.[19] USERRA however, contains no provisions for extending or increasing coverage due to disability.[20] An employee who wishes to invoke this extended disability period should therefore consider COBRA.

While USERRA technically does not include any provisions on issues of notice, election rights, and timing of premium payments, the Department of Labor has issued guidelines that follow those of COBRA’s.[21] This means that the responsibility of the employee and employer in providing notice to elect either payment will be less strictly enforced under USERRA, subject to a standard of reasonable notice. COBRA will be more strictly enforced, but to avoid confusion, an employer can abide by the same notice requirements.

The many differences between the continuation of coverage under USERRA versus COBRA make the decision a personal and factually relevant one. The employer is charged with the duty of providing both options to the employee. [22] A discussion of the differences between the two statutes will better assist the employee to make the appropriate decision.