CBO Eyes Reserve Call-Up Impact

“Calculating the decrease in profitability associated with call-ups may be virtually impossible,” the CBO warns.

Although USERRA states that a called-up employee may keep employer-sponsored coverage during reserve service, an employer can require the employee to pay for the entire cost of the premium. But some employers continue to pay their share of the premium for called-up employees, the CBO says.

One survey found that 40% of large employers said they maintained their activated employees’ health coverage at existing levels.

An employer that provides pension benefits for its employees must maintain reservists’ eligibility to participate in the pension plan. Once reservists return, the employer must handle the reservists’ vesting and accrual of benefits as if returning reservists had been continuously employed.

At employers that provide a 50% match for the first 6% of salary contributed to a 401(k) plan, the typical cost of a 1-year activation would be about $2,100, the CBO estimates.

The Defense Department could ease employer problems resulting from call-ups by exempting certain reservists or particular civilian positions from call-ups, but “declaring some individuals ineligible for activation might impede DoD’s ability to mobilize sufficient personnel and might discourage participation in the reserves,” the CBO says. “DoD would then need to use pecuniary or other incentives to attract additional people to reserve service.”