COBRA and severance packages

Stacey H

We had an employee on "paid administrative leave" pending the outcome of an investigation. Yesterday, the employee and his atty. thought it would be best if the employee resigned. I have a letter that states that this person resigned as of yesterday, BUT that he will be paid until the end of November. Now, next week, we will give the employee a check for his pay thru the end of November and his remaining vacation and personal days. So when do I send out his COBRA paperwork...now, or at the end of November?

Down_the_Middle

Assuming the benefits package continues throughout the payment period (as a current employee), COBRA should commence at the conclusion of the payment period.

Lori B

I agree in this situation, but be careful in others. If the pay period exceeds 12 weeks I would COBRA right away. Most health contracts contain provisions that the covered participant must be "actively at work." They typically build in a 12-week leave period to recognize FMLA. I've known some companies that offer 6-12 month severance packages and cover insurance, with COBRA period starting at the expiration of the severance package. Not good. The carrier could balk at providing coverage in such a situation.

WT

Send the COBRA letter out as soon as you want to do so. Address the letter to the employee and family. Get a certificate of mailing (not a registered letter) to prove it was mailed first class mail. The qualifying event is the resignation and subsequent loss of coverage. The employee and/or the family have 60 days from the date of loss of coverage to elect COBRA coverage. Good luck.