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Military Reservist called to Active Duty (USERRA/Heart Act)

Military reservist employees have special rights when called to active duty.

Question: What rights do military reservist employees have to continue health coverage when called to active duty

Compliance Team Answer:

USERRA Continuation Coverage

Military leave is protected under USERRA, not FMLA/CFRA/PDL. Unlike those other forms of protected leave, USERRA does not provide for any period of required continuation of active coverage. Rather, it provides the COBRA-like structure for continuation coverage that permits the employee to continue coverage for up to 24 months (rather than 18 months through federal COBRA).

Under the USERRA/COBRA structure, the employee must pay 102% of the premium to continue coverage. This is different from the FMLA/CFRA/PDL structure that provides for active coverage at no more than the active employee-share of the premium.

When an employee loses coverage under a group health plan because the employee leaves work to perform uniformed service, the employee (and the employee’s spouse and dependent children who lose coverage) will be entitled to the protections of both COBRA and USERRA. Where the requirements of COBRA and USERRA differ, the employee or dependent is entitled to protection under the law that gives the employee or dependent the greater benefit. COBRA and USERRA continuation coverage will run concurrently.

In general, the differences between COBRA and USERRA are subtle and not worth detailing. However, there is one big difference: USERRA provides continuation coverage rights for a period of up to 24 months (as opposed to 18 months for most COBRA qualifying events).

Keep in mind that if an employee’s coverage terminates while on military leave (e.g., the employee does not timely elect or pay for USERRA continuation coverage for the entire leave period), the company will need to reinstate the employee’s active coverage upon return without the need to complete any eligibility or waiting period.

HEART Act Health FSA Qualified Reservist Distribution

Section 125 cafeteria plans are permitted (not required) to offer employees who are called to active duty the opportunity to cash-out their health FSA balance as a taxable distribution. This is referred to as a “qualified reservist distribution” or QRD. It is the only time a taxable distribution of a health FSA balance is permitted.


About the author

Brian Gilmore

Brian Gilmore is the Lead Benefits Counsel at Newfront. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law.


The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.

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