Members of the US Armed Services perform vital services to protect our nation. In return, USERRA provides protection for them with their civilian employers. Most service members are aware that USERRA requires their employers to reemploy them after a period of uniformed service, prevents them from being fired and must provide certain seniority-based benefits, so long as specific conditions are met upon reemployment.
However, USERRA actually goes much further than simply holding your job for you. It also protects your healthcare coverage and your retirement contributions. In this section, we will discuss how USERRA applies to health plans and pension plans, both of which are essential factors that affect your quality of life.
Healthcare is not optional today – it’s required under the law. Of course, it’s also vital in order to provide for your medical needs and those of your family. USERRA provides protection for military service members and their families, ensuring that you can keep your healthcare coverage from a civilian employer if you want to do so. Note that this includes group health plans as defined by the Employee Retirement Income Security Act of 1974.
As long as you are absent from your civilian job for 31 days or longer because of uniformed service requirements, you may elect to continue your healthcare coverage made available to you through that employer. However, note that there are limitations placed on this extension of coverage. You are only eligible to be covered for 24 months from the date your uniformed service begins, or the day after you return to employment (or fail to apply for reemployment), whichever is shorter.
It is also important to understand that your healthcare costs may increase, at least a small amount. If you elect to continue your healthcare coverage available through a civilian employer while you are performing uniformed service, you may be required to pay up to (but not more than) 102% of the full plan premium associated with the average employee share. However, note that if your service period is less than 31 days, you are not required to pay more than the average employee’s share of coverage (i.e. no more than 100% of the premium).
In addition to protecting your coverage for up to 24 months, you also benefit in other ways. One of those is that no waiting period or exclusion can be applied for health plan reinstatement if you chose not to maintain healthcare coverage during your period of uniformed service. In effect, if you elect not to continue coverage during your time of service, you can resume coverage immediately on your return to civilian employment without any penalties.
Note that there are some exceptions here. For instance, any illness or injury sustained or aggravated during/by performance of service in the uniformed services falls under VA benefits, rather than civilian healthcare coverage. Additionally, if the servicemember becomes eligible for medical and dental care under chapter 55 of title 10 through subsection (D) of section 1074, that coverage will apply until reemployment after uniformed service concludes.
USERRA provides protection for US service members whose civilian employers provide them with pension plans. The IRS and the Department of Labor have specific requirements for employers and service member pension plans, and we list them below:
- Employers are required to fund pension benefits that a reemployed service member did not receive due to qualifying uniformed service.
- Employers are required to make non-elective employer contributions within profit-sharing and money purchase pension plans.
- Makeup contributions and allocations are calculated based on the pay rate the employee earned prior to leaving for uniformed service or the rate they would have received during the period of military service. The average monthly income for the preceding year can also be used.
- Employers are not required to provide makeup contributions or allocations until the service member is reemployed after uniformed service.
- All contributions that do not hinge on employee contributions (i.e. contribution matching), must be made no later than 90 days after the first day of reemployment or when contributions are normally due for a year in which the employee was absent for uniformed service.
- Reemployed service members are not eligible for any sort of lost earnings or additional benefits/forfeitures that occurred due to uniformed service. For instance, you are not eligible for interest that would have been earned had you remained employed during that period. However, you must be provided with the opportunity to make any missed contributions after you are reemployed.
- Missed employee contributions can be made at any time up to three times the period of service, but not beyond five years. However, contribution limits remain the same as they would have been at the original time of contribution.
- If an employee serves for more than a year in uniformed service, the employee can designate the specific year or years their contributions will cover.
- The employee/servicemember will determine what period their contributions cover in terms of 401(k)s, including makeup contributions and current deferrals.
- Pension plan loan repayments can be suspended when a servicemember is involved in uniformed service, and participant loan interest accrual is usually limited to 6% or less. However, the servicemember must ask for this interest rate limit and they must provide a copy of military orders at that time.
- Employers enrolled in a multi-employer pension plan who reemploy a servicemember after a period of uniformed service must provide information in writing to the plan administrators about the employee’s reemployment within 30 days of the individual returning to work.
- For example: You left your civilian employment at which you earned $100,000 per year. Your employer had an employer-only contribution plan in which the employer contributed 5% of your pre-tax income to your retirement plan. If you were on military leave for 365 days, and you earned zero income, your employer would have 90 days after your reemployment to contribute 5% of your pre-tax salary (or $5,000) to your retirement plan.
- If you were in an “employee-match” plan under the circumstances above, you would have 90 days to make your 5% (or $5,000) contribution to your retirement plan and your employer would have to match it within 90 days (another $5,000).
As you can see, US Armed Services members enjoy a wide range of protection under USERRA, including protection of healthcare coverage, pension and retirement plans. Be aware of these protections and be sure to check your retirement contribution statements often after you return from military service.