QUESTION: A former employee who left our company a year ago has been receiving COBRA coverage under our major medical plan. He has been called to active duty in the uniformed services. We understand that USERRA imposes continuation requirements on health plans, and that active-duty members of the uniformed services are automatically covered under the military’s health care program (TRICARE). Does USERRA give our former employee any continuation rights under our plan? And can we terminate his COBRA coverage when he becomes covered under TRICARE?
ANSWER: You are correct that USERRA requires health plans to offer continuation coverage under certain circumstances. Specifically, USERRA gives continuation rights to employees who—
- have health plan coverage in connection with their employment; and
- are absent from employment for service in the uniformed services.
But your former employee will not be entitled to USERRA coverage under your plan because he was not employed by your company when he was called to active duty—his uniformed service did not cause him to be absent from employment with your company.
As for terminating the former employee’s COBRA coverage, the answer is less clear. COBRA coverage can be terminated early when a qualified beneficiary becomes covered under another group health plan, if the other coverage is acquired after COBRA is elected and certain conditions and special rules are satisfied. IRS COBRA regulations state that other group health plan coverage for which COBRA coverage may be terminated includes “any group health plan of a governmental employer or employee organization,” with no exception for coverage provided to members of the uniformed services. But according to DOL FAQs, “COBRA continuation coverage cannot be terminated because a reservist receives health coverage as an active duty member of the uniformed services and a reservist’s family receives health coverage under a government program such as TRICARE.”
Given the conflict between the IRS and DOL guidance, we think the better course is not to terminate COBRA for individuals who become covered under a plan providing health benefits in connection with uniformed service. However, plan administrators faced with this issue should consult with their insurers and stop-loss carriers to make sure that differing interpretations of the law do not result in uninsured COBRA liability. Note that the same uncertainty does not exist about terminating an individual’s USERRA coverage due to TRICARE coverage, because USERRA does not permit early termination of coverage on account of coverage under another group health plan.
For more information, see EBIA’s Group Health Plan Mandates manual at Sections XVIII.D (“USERRA’s Continuation Requirements for Health Plans”), XVIII.E (“Health Plan Continuation Coverage When Plan Is Subject to COBRA”), and XVIII.H (“Health Plan Issues Related to TRICARE and Other Military Coverage”); see also EBIA’s COBRA manual at Sections VIII.C.3 (“Early Termination Because of Other Group Health Plan Coverage”) and XXXVI.B (“USERRA: Health Plan Continuation Coverage When Plan Is Subject to COBRA”).
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