Insuring our Troops: USERRA and Benefit Plans

Insuring troops .Blog

First, please consider a few numbers: 2,200. 211,000. 6,150,000. These are dollar amounts representing settlement costs for employers who were sued by the Department of Justice for failing to properly administer pension rules for returning service members. However the amounts may strike you, these numbers are representative of the reality that there are mistakes both large and small to be made when administering benefits for service members returning to your workforce. 

In a stroke of solidarity with the nation’s men and women in uniform, the 103rd U.S. Congress passed the Uniformed Services Employment and Reemployment Rights Act (USERRA) in its second session on September 28, 1994. USERRA governs military leave for qualified service members and addresses a host of related items, such as pension benefits, health insurance, and more. This is the same congress, albeit in a different session, that gave us the Family and Medical Leave Act of 1993, signed by President Bill Clinton just a year earlier. At that time, U.S. troops were returning home from humanitarian missions in the Balkans, Haiti, and Somalia, and establishing no-fly zones over Iraq.

Twenty years later, the struggle to properly implement USERRA continues. When human resources professionals and their counsel are not calculating cumulative five-year leave maxima, they are trying to figure out what exactly must be done about 401(k) vesting rights, life insurance policies, and health insurance benefits. Luckily for employers, the answers are not as nebulous as the past three years of settlements may have us believe. 

Who is covered under USERRA?  It is a safe bet that if you employed a returning service member, he or she is qualified for employment and re-employment protections. Active duty or reservist, deployed in a combat zone or on a weekend drill, flying fighter jets or loading supplies, regardless of status as soldier, sailor, airman, rifleman, or coast or national guardsman, you can almost invariably count on USERRA coverage. With respect to employers, here too there are few limitations and no exceptions for size.  In fact, even successors-in-interest to certain employers are covered under the act. The only general obligations imposed on the service-member employees are sufficient notice of the leave to the employer and timely reapplication upon return from leave. In fact, “reapplication” has little to do with reapplying and need not even be in writing. In the words of the Employer Support of the Guard and Reserve FAQ on the topic, a statement consisting of the following is sufficient for reinstatement: “I used to work here. I left for service.  Now, I am back from service, and I want my job back.”

Having established that your employee who is being deployed in Afghanistan is covered, and that you must afford her all the rights discussed under USERRA, what do you do? The answer may depend on timing, employer practices, or plan rules. For specifics, please refer to the table at the end of the article. USERRA also includes numerous other provisions not discussed here. For details, contact MSEC.

Type of Benefit Primary Factor At Commencement of Leave Upon Return

Health Insurance

(incl. medical, dental, vision)


Less than 30 days: continue coverage as if employee had not left on military leave.

31 days or more: employee may elect to continue coverage at up to 102% of the full premium for up to 24 months.

Benefits (including employer-paid premiums) must be immediately restored upon reinstatement.

Pension and Related

Tax-Favored Savings Plans

Plan Terms

Plan participation must continue but employee and employer contributions can be stopped until such time as the service member is reinstated.

Note on Vesting: Although courts have noted that USERRA is silent on the topic, treating an employee as if he or she had not left likely requires that the employee be allowed to become eligible for participation in a plan while on leave.

Employee may elect to make “catch-up” contributions for the time on USERRA leave, and has three times the duration of the leave (up to 5 years) to make such contributions.  The employer must make any contributions to the plan pursuant to the prevailing terms of the plan within the same timeframe.

Non-seniority Benefit Plans

(incl. life insurance,

employee stock ownership plans, holiday pay)

Employer Practices   

Continuation depends on whether the employer allows continuation for individuals on similar types or durations of leave.  If there are varying practices, the employer must abide by the most generous terms.

Benefits must be restored immediately upon reinstatement.