Active Duty Employees and Their Health Insurance:

If you have employees who are members of the Reserve or if they leave your employment to go on active duty, it is important to understand the ramifications to your employee's insurance policy under your group health plan. Most employers must provide COBRA-like benefits to their active duty personnel, until the government insurance for that employee kicks in or for eighteen months, whichever comes first.

If an employee will be on active duty for more than 30 days, they and their dependants will then be eligible for military health care. However, during this time they will need to stay under their group health plan to ensure complete coverage. The COBRA act and the Uniformed Services Employment and Re-employment Rights Act of 1994, were enacted to provide military personnel with more options for their insurance plans during this transitional period.

But how does this affect you as a business owner? Basically, when your employee goes on active duty, they will still be able to continue their health insurance under your group plan up to eighteen months, but they may need to pay higher premiums for this privilege. In addition, once they have returned from active duty, they will be able to re-enter your group plan, but without any waiting or exclusion periods.

However, under USERAA, there are prohibitions if the employee was made ill or injured, or had a previous illness or injury that was exacerbated during their active duty service. In other words, this pre-existing condition would then be covered by military health care, and the employee would still be eligible for your group health plan, minus the exclusion for what military health care would cover.

If your employee leaves your service and is currently utilizing COBRA before going on active duty, you cannot terminate their COBRA coverage. Likewise, if one of their dependants prefers to remain under COBRA coverage you cannot deny them coverage as well.

In addition, USERAA protects active duty personnel from losing their retirement benefits, vesting or accrual of benefits while they are on active duty. The time that is spent away from your employment on active duty must not count against them or be considered as a break of service with your company. When a service member returns, they must be treated as though they never left your employ, no matter what type of coverage, retirement plan or benefits they received before going on active duty.

While your employee is on active duty, you will not need to provide 401k contributions for that employee while they are gone. However, when that employee returns, you would need to make your contributions that would have been made while they were away. In this case, it is typically easier to continue making your contributions unless you do not believe that your employee will be returning to your company once they are off of active duty.

Our servicemen and women provide our country with our best defense, and USERAA was enacted to ensure that these service people will be able to get the health care and benefits they need, without worrying about losing them while they are on active duty.

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