Userra Cobra Champus Tricare

[Guest Nodak]

I have a client with a medical plan offered thru a 125 plan. Like most employers, the client has a number of employees who are being called to active military service. The client would like to keep these employees on the health plan, and pay 100% of coverage, for family coverage, for as long as they may be gone.

I have explained, without success, that these employees have coverage under USERRA and/or COBRA. The client’s problem with this is the 18-month limitation. The client wants these employees, and their families, covered as long as they are gone on active duty.

I have tried, without success, to convince the client that the military personnel are covered by CHAMPUS/TRICARE. I have tried, without success, to convince the client that even if the client kept these people on the plan, the reinsurance carrier will have some major problems with this, and that the client will be stuck self-funding their own plan without reinsurance. Basically, the client is going to do this no matter what because it is "the right thing to do."

Has anyone else faced this? If so, can you offer any advice?

One of my many fears is that we will have discrimination issues treating the military group differently than the non-military group. Obviously, the client will not pay COBRA for an unlimited period of time for all former employees, only those employees who are called to active duty. Doesn’t this look like a possible discrimination issue?

Also if, God forbid, these employees are in active military service in excess of 18 months, would the payment of the health care be considered income to the employee? If so, how is it taxed?

Are there issues/questions I have missed?

As always, no good deed goes unpunished.

Any help anyone could provide would be greatly appreciated, as would citing to a legal authority.

THANKS!

[Sandra Pearce]

Perhaps you can convince the client to follow the rules of USERRA and offer the employee (who is no longer an active employee by any plan definition) continuation of coverage under COBRA with the employer picking up the cost of the COBRA coverage. The employee called up to military duty will probably not complete the COBRA paperwork as he or she will probably understand the benefits provided through the military. Worst case if the employee completes the COBRA enrollment form then the employer pays for a benefit with no real value. USERRA does require an employer to offer COBRA continuation.

[Guest Nodak]

While that is perfectly logical, the client wants nothing to do with logic. He is absolutely going to keep them on the health plan no matter what. That being the case, do you (or does anyone) have any response to those questions above? Thanks again!

[Sandra Pearce]

If the client is fully insured then the insurance policy should be provided to the client to support the client's inability to keep this person on the plan, other than as a COBRA participant. If the client is self-insured then the reinsurer might have some words of wisdom for you. The client will likely be paying a premium for a benefit that does not exist.

[jeanine]

we have several employers with a self-funded plan who wish to do the same thing. I see a distinction between paying premiums or paying USERRA contributions for reservists and paying COBRA premiums for terminated employees. USERRA also requires that the employer maintain retirement contributions, allow the reservists to return to work, etc. COBRA does none of these. My argument is that Congress meant for this to allow employers to be more generous if they wanted and any difference in paying USERRA vs. COBRA is not going to amount to discrimination. There are many reasons someone may want to maintain their employer coverage for their families. We are not a military town but we have plenty of reservists called up. Their families are not going with them. There is no armed services hospital, etc. anywhere near here and obtaining health care services through private providers using TriCare (or whatever it is called) is more of a hassle than using your own employer funded coverage. Additionally, our state law requires that employers provide USERRA coverage through health insurance plans.

[Guest Nodak]

Thanks Jeanine – great advice – I thought of the USERRA v. COBRA distinction also, ran it by a few people here and most agree there is a clear distinction & they would void any issues of discrimination. Any thoughts on the tax consequences if coverage extends past 18 months?

[maverick]

Jeanine makes a good point. There are a lot of providers who don't participate in TRICARE (used to be called CHAMPUS). So, someone may not be able to use their family doctor if TRICARE is the only coverage.

Having used both TRICARE (retired USMC) and civilian health insurance for the past 13 years, I can assure you that, in most cases, civilian health insurance coverage is superior. When families remain in the reservist's home town, and a military medical facility is not located nearby, obtaining health care can be difficult. Also, although they try hard to do a good job, private contractors who pay the claims don't always process claims timely. I've seen collection agencies go after military dependents because TRICARE was slow making payments.