COBRA and severance packages

Stacey H · October 2002

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 · October 2002

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 · November 2002

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 · November 2002

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.

COBRA and severance packages

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