DOL Issues Final Regulations Implementing the Uniformed Services Employment and Re-employment Rights Act (USERRA)
In an effort to protect the rights of individuals who leave employment positions to undertake military service, Congress enacted the Uniformed Services Employment and Re-employment Rights Act (USERRA) in 1994. Recently, however, the U.S. Department of Labor’s Veterans Employment and Training Service (VETS) issued final regulations interpreting USERRA in order to provide guidance to employers and employees concerning their rights and obligations under this act. The new regulations, effective January 18, 2006, include additional guidance on re-employment, seniority, pay, timetables for returning to work, and specific administrative instructions on the continuation of coverage under an employer-sponsored group health plan. This Compliance Alert will focus on health plan continuation regulations and specific employee notices.
With respect to my health plan, what does USERRA require?
Much like COBRA, USERRA requires employers to offer continuation of health plan coverage at the employees’ expense for up to 24 months. USERRA is not the same as COBRA and can’t be viewed just as “COBRA” for an extra six months.
Who must comply with USERRA?
USERRA applies to all public and private employers. Even small employers with fewer than 20 employees are required to offer continued health plan coverage for up to 24 months. Government and church plans are not exempt.
What Notices are Required?
The DOL also has issued two NEW notices (one for the private sector and one for the public sector) of USERRA rights for employers to post for their workers. In compliance with the Act, employers are required to post the new version of this notice on or before January 18, 2006, where other employee notices are usually placed.
To download the private sector version, click here.
To download the public sector version, click here.
While COBRA has several very specific notice requirements, these postings are the only required notices for USERRA. However, we recommend you issue an individual notice of USERRA rights when an employee leaves for uniformed service.
What are the administrative changes for continuing health coverage?
Previous USERRA regulations were not very specific with respect to the election of USERRA continuation coverage, what constitutes timely payment, and when cancellation of coverage is allowed. However, the new regulations indicate that, for health plans also covered by COBRA, it may be reasonable to adopt COBRA-compliant rules regarding election of and payment for continuing coverage, so long as those rules do not conflict with USERRA or the new cancellation rules outlined below.
1. Canceling Coverage for Failure to Elect Continuation Coverage
Under the new regulations, health coverage may be cancelled upon departure for uniformed service under two separate conditions: 1) if the departing employee fails to give advance notice of service and fails to elect continuation coverage, or 2) if the employee leaves for a period of service exceeding 30 days and gives advance notice, but fails to elect continuation of coverage. It should be noted that if the employee was excused from giving advance notice because of military necessity, impossibility or unreasonableness, then coverage must be retroactively reinstated upon the employee’s election to continue coverage, as well as payments of all amounts due (no administrative reinstatement costs can be charged). Also, the regulations offer conditions under which the employer must permit reinstatement of uninterrupted coverage and payment of all unpaid amounts should the employee elect coverage continuation after his or her return.
2. Canceling Health Coverage for Failure to Make Payments
Plans may adopt reasonable rules allowing cancellation of coverage continuation if timely payment is not made. COBRA guidelines may be used in this case.
An employer who wishes to follow the COBRA rules with respect to USERRA should include a statement in their employee handbook to this effect. A sample statement is attached and can be modified for this purpose.
The USERRA guidelines specify other changes with respect to 401(k), vacation leave, sick leave, and other important facts with respect to re-employment eligibility. To view the final USERRA rules, click here. You may also visit the DOL website at www.dol.gov/vets, or contact our office at 919-403-1986.
January 23, 2006
Hill, Chesson & Woody Employee Benefit Services
194 Finley Golf Course Rd, Suite 200,
Chapel Hill, NC 27517
Phone: 919.403.1986
Fax: 919.913.0237
www.hcwbenefits.com