Military service and group insurance

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1 FEDERAL LAWS AND GROUP BENEFITS Military service and group insurance How does this apply to you? Each situation is different. The information we share here is simply a general overview of a topic. To find out how this information might affect your benefits plan, we encourage you to consult your own ERISA or tax advisor. That way, you will have the advice you need to best manage your benefits plan. We do not provide ERISA, tax, or legal advice. Understanding military service Employers, policyholders, and brokers need to know how employees group insurance coverage will be affected if employees are called into military service. Here are answers to frequently asked questions about: Sun Life s perspective about how military service affects employees group insurance coverage, Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), Military leave under the Family and Medical Leave Act (FMLA), and Servicemembers Group Life Insurance (SGLI). Sun Life s perspective about how military service affects employees Sun Life Group insurance coverage This information is meant to provide general guidance. Any approved leave of absence assumes continued payment of appropriate premium. Any claim filed under a policy will be evaluated based on facts and circumstances and will be subject to the terms and conditions of the policy. What is Sun Life s position regarding continuation of coverage for group employee benefits? * In accordance with USERRA requirements and if the employer permits employees to continue benefits during a leave of absence, Sun Life will allow an insured employee and his or her dependents to continue his or her Group coverage for the longest continuation period available to other employees during an approved leave of absence. The determination of coverage will be made based on a review of the specific facts for each specific claim. It is important to note that the same policy provisions, including limitations and exclusions, apply to employees on military leave as to any other employee. For example, some benefits are not payable if the resulting condition is due to or results from active military duty or participation in war, declared or undeclared, or any act of war. * Sun Life offers group term life, AD&D, dental, disability, critical illness and accident insurance.

2 For Dental, coverage may be continued for the insured employee and his or her dependents up to 24 months. This coverage runs concurrently with any COBRA extension for which the employee or his or her dependents may be entitled. An employer may charge up to 102% of the premium cost. The determination of coverage will be made based on a review of the specific facts for each specific claim. What is Sun Life s position regarding waiting periods? Upon return to employment, benefits may be reinstated within 31 days of the employee s return to active employment. No waiting period or limitations will apply, if one would not have been imposed had coverage not been terminated because of service. If an insured employee goes on USERRA-covered military leave during a time when the employee is satisfying the eligibility waiting period, the period of time the employee is on USERRAcovered military leave will be credited toward the employee s satisfaction of the eligibility waiting period. The determination of coverage will be made based on a review of the specific facts for each specific claim. What is Sun Life s position regarding Stop-Loss insurance? Assuming that the employee has continued his or her health insurance while on USERRA-covered military leave under USERRA, Sun Life will administer a claim involving expenses incurred by the employee while on such leave as it would any other claim, subject to applicable policy terms and exclusions. After a Stop-Loss policy is issued, any changes to the welfare benefit plan must be approved by Sun Life before those changes will become effective under the policy. USERRA The Uniformed Services Employment and Reemployment Rights Act of 1994 describes rights relating to employment and reemployment for individuals who serve in the uniformed services. USERRA applies to all employers regardless of size. USERRA contains specific requirements for protected leave, rules for benefits that employees are entitled to during military leave, notices and postings, and the requirements for reinstatement in job positions. USERRA also prohibits discrimination against any employee or prospective employee because of past, present, or future application for, or membership in, a uniformed service. The following is a general overview of some of USERRA s key provisions. Who is eligible for USERRA? Employees who have been absent from a position of employment because of service in the uniformed services may be eligible for certain job-related protections under USERRA. Service in the uniformed services means the performance of duty on either a voluntary or involuntary basis in a uniformed service, including the following: Active duty Active duty for training Initial active duty for training Inactive duty for training Full-time National Guard duty Absence from work for an examination to determine a person s fitness for any of the above types of duty Funeral honors duty performed by National Guard or reserve members Duty performed by intermittent employees of the National Disaster Medical System (NDMS), which includes the Department of Homeland Security Emergency Preparedness and Response Directorate/FEMA when activated for a public health emergency, and approved training to prepare for such service

3 The uniformed services include the following: Army, Navy, Marine Corps, Air Force, or Coast Guard Army Reserve, Naval Reserve, Marine Corps Reserve, Air Force Reserve, or Coast Guard Reserve Army National Guard or Air National Guard Commissioned Corps of the Public Health Service Any other category of persons designated by the President in time of war or emergency What is an employee s status during military service? USERRA stipulates that a person who is absent from a position of employment by reason of service in the uniformed services shall be deemed to be on furlough or leave of absence while performing such service. What about continuation of health benefits during a USERRA leave? Under USERRA, an employee may elect to continue health insurance coverage during his or her service in the uniformed services. If the employee is absent from work because of service in the uniformed services for a period of less than 31 days, the employee can be charged only the regular employee share for the continued health benefits. If the absence because of service in the uniformed services is longer than 31 days, the employee may elect to continue the coverage for up to 24 months after the date on which the absence begins, and the employer may require the employee to pay up to 102% of the full insurance premium for coverage. USERRA regulations allow employers to cancel health insurance coverage for employees on military leave if the employee departs for leave without electing to continue coverage. The Department of Labor (DOL) regulations also allow an employer to develop reasonable rules to cancel coverage for employees who opt to continue coverage during their military leave but who fail to pay for the continued coverage. However, employers should also be cautioned that the DOL regulations contain liberal reinstatement provisions allowing service members to restore coverage upon return to work. What about continuation of other benefits during a USERRA leave? USERRA stipulates that a person on USERRA leave is entitled to such other rights and benefits not determined by seniority as are generally provided to employees having similar seniority, status, and pay who are on furlough or leave of absence. The types of rights and benefits that an employer may offer to employees on leave/furlough may include, but are not limited to the following: Vacation (the DOL regulations stipulate that vacation is nonseniority-based) Group life insurance benefits Group short-term and/or long-term disability insurance benefits Health Care and/or Dependent Care Flexible Spending Accounts Participation in 401(k) plans Year-end bonuses Transportation plans How does USERRA impact Waiver of Coverage? Employees on USERRA leave may have the right to waive coverage of rights and benefits only by knowingly providing a written notice of intent not to return to an employment position after his or her uniformed service. The employer must show that the employee taking leave knowingly provided clear written notice of intent not to return to a position of prior employment and, in doing so, was aware of specific rights and benefits she or he would lose.

4 What is reinstatement of health plan benefits and what are seniority-based benefits? If an employee is not covered under his or her employer s health plan at the time that he or she returns from military leave (for example, because the employee did not elect continuation coverage; because the employee failed to comply with the terms and conditions for continuation coverage; or because the period for such coverage lapsed), the employee s coverage must be reinstated. The employer may not impose a waiting period unless a waiting period would have been imposed had coverage not been terminated due to the employee s military service. Health coverage means medical and/or dental coverage, and may include cafeteria plans, such as flexible spending accounts. While on USERRA-covered military leave, an employee continues to accrue all seniority benefits that he or she would have accrued had he or she not taken military leave, and is eligible to receive those benefits upon re-employment. Are there any additional requirements? USERRA has additional provisions that are not addressed in this document, including provisions pertaining to reinstatement to employment, limitations on termination of employment, special treatment of pension plan benefits, and posting requirements. Employers may consult the DOL website for further information. Does USERRA supersede state and local laws? USERRA does not supersede any other federal or state laws that establish rights or benefits greater than those afforded by USERRA. Some states and local municipalities have adopted laws protecting individuals absent from employment due to military service, and those laws may grant employees rights that are greater than those provided under USERRA. Military leave under the FMLA The following gives basic information about an employee s eligibility for unpaid leave on account of military service under the FMLA, including the January 2008 and October 2009 amendments to the FMLA relating to military leave and the 2013 amendments to the Code of Federal Regulations (CFR). What are the FMLA provisions relating to military leave? Injured service member leave. In January of 2008, the FMLA was amended to state that an eligible employee has the right to a total of 26 work weeks of unpaid leave during a twelvemonth period to act as the caregiver of a spouse, son, daughter, parent, or next of kin ( covered service member ) suffering from a serious illness or injury that was sustained in or aggravated by service in the line of duty while on active duty. As a result of 2013 CFR amendments, this entitlement applies not only to covered service members who are still in the military but also to veterans who were other than dishonorably discharged within the preceding five years and who are receiving treatment, recuperation, or therapy for a serious medical condition incurred while in the line of duty on active duty or for pre-existing illnesses and injuries that were aggravated by such service. Qualifying exigency leave. An insured employee also has the right under the FMLA to take up to twelve weeks of unpaid leave for a qualifying exigency due to an employee s spouse, son, daughter, or parent who has been notified of an impending call or order to active duty in the Armed Forces. A qualifying exigency may include: (1) short notice deployment; (2) military events and related activities; (3) childcare and school activities; (4) financial and legal arrangements; (5) counselling; (6) time needed to be spent with a military member who is on temporary rest and recuperation leave; (7) post-deployment activities; (8) additional activities that the employer and employee agree constitute a qualifying exigency; and (9) time needed to care for a military member s parent who is incapable of self-care when the care is necessitated by the member s covered active duty. There are specific requirements associated with these various qualifying exigencies, including for example that leave for rest and recuperation is limited to a maximum of 15 calendar days.

5 An insured employee is entitled to maintain his or her benefits during the leave in the same manner as before the leave. If the employee does not return to work, the employer can request that premiums be returned. If premiums are contributory, the employee needs to continue to pay the same contribution to the employer. COBRA will not apply unless the insured employee does not return to work. Who is eligible for FMLA? Employees who have been employed by the same employer for at least 12 months and who have been employed for at least 1250 hours of service during the 12-month period immediately preceding the leave are eligible for FMLA leave if they work at a worksite where 50 or more employees are employed within a 75-mile radius of such worksite. In determining whether an employee meets the employment service requirements, employers must count all periods of absence from work due to or necessitated by covered service under USERRA. Where can I find more information about FMLA? Visit the Department of Labor s website about FMLA: Contact your local Sun Life Employee Benefits Representative. Learn more Visit these sites: Department of Labor USERRA information: Department of Labor FMLA/military information: Contact your local Sun Life Employee Beneits Representative. Policyholders, please contact our Sun Life Financial Group Customer Service Center at , Monday through Friday between 8:30 a.m. and 7:00 p.m. ET. How do these laws affect benefits plans? Each situation is different. The information we share here is simply a general overview of a topic. To find out how this information might affect your benefits plan, we encourage you to consult your own ERISA or tax advisor. That way, you will have the advice you need to best manage your benefits plan. We do not provide ERISA, tax, or legal advice. SGLI SGLI stands for Servicemembers Group Life Insurance. SGLI provides contributory group term life insurance to all members of the uniformed services. How much are service members covered for under SGLI? Service members are automatically covered for $400,000, unless they elect to be covered for a lesser amount or decline coverage. Is SGLI available for spouses and dependent children? Yes. SGLI is available for spouses and dependent children of SGLI-insured service members. How can I learn more about SGLI? Please visit the SGLI site:

6 Wake up to the benefit of our benefits. Sun Life has been helping people protect what they love for nearly 150 years. What s different about our employee benefits? Brighter choices. We offer you a variety of life, disability, dental, accident, cancer, critical illness, and stop-loss insurance, so you can customize the best plan for your company. Brighter partners. We help employees grasp the true value of coverage through our plain language, education, and helpful services. Brighter focus. We make employee benefits our core focus, and every day we look at our customers needs to make our plans more practical and personal. At Sun Life, we know that offering the right benefits is good for everyone. That s why life s brighter under the sun. Visit us online: SunLife.com/us SunLifeKnowsBenefits.com Product offerings may not be available in all states and may vary depending on state laws and regulations. For more information about this topic or our group products and services, please contact your local Sun Life Financial Representative. One Sun Life Executive Park Wellesley Hills, MA GMPWP-5277b Group insurance policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states except New York. In New York, group insurance policies are underwritten by Sun Life Health and Insurance Company (U.S.) (Windsor, CT). Product offerings may not be available in all states and may vary depending on state laws and regulations. Sun Life Assurance Company of Canada is a member of the Sun Life Financial group of companies Sun Life Assurance Company of Canada, Wellesley Hills, MA All rights reserved. Sun Life Financial and the globe symbol are registered trademarks of Sun Life Assurance Company of Canada. Visit us at SLPC /15 (exp. 10/17)