Health FSA and USERRA Continuation Rights

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As you may know, when a participant in a medical plan (including a health FSA) goes on a military leave, s/he has the right to continue coverage under USERRA for up to 24 months on a COBRA-like basis. Under COBRA, there is a special exception on the duration of COBRA coverage for health FSAs which satisfy certain rules, including that the health FSA meets a HIPAA exemption (which would usually be met if the FSA contains only employee salary reduction contributions) and depending on the balance in the FSA and the amount remaining to be contributed for the remainder of the year at the time of the qualifying event. The upshot of this exemption is that the health FSA is either not subject to COBRA continuation, only subject to COBRA continuation until the end of the calendar year of the qualifying event or also subject to COBRA for the calendar year following the calendar year of the qualifying event. I had hoped that the final USERRA regulations would provide more information on the duration of the continuation period as applied to health FSAs and whether the employer would tie that duration in to the IRS COBRA regulations. That being said, does anyone have any thoughts on how long health FSA coverage should be provided with respect to an employee going on military leave in order to comply with USERRA?