“What will happen, God forbid, if something happens to someone in my family?” This is a scary question for anyone, but especially terrifying for someone who has just lost their job and their health benefits. After you are fired, many stresses and concerns run through your head. One of these concerns is what will happen to medical benefits.
Fortunately, there are several options and ways for you to receive your medical benefits after termination that can give you enough time to secure another job and/or find a permanent solution. But you will be taken advantage of time and time again if you do not educate yourself about your options, the system, and the law. Here’s a section of my book “The Employee Rights Handbook” that deals with just that. Read now and get informed!
Medical, Dental, and Hospitalization Benefits
Have your benefits explained to you at the negotiation session so you’ll understand them. For example, does coverage stop the day you are fired or is there a grace period? Ask for a copy of all applicable policies and review them carefully. Negotiate to extend coverage beyond the grace period, especially if you are responsible for maintaining your family’s health coverage and do not expect to find a replacement job in the near future.
Ask the employer to continue paying your medical and health premiums for another six months (or a year) while you are receiving salary continuation. Many employers will grant this request if you ask for it. The advantage of this arrangement is that in addition to receiving free medical coverage for several months, you may have the right to receive COBRA health benefits at your expense up to 18 months after the employer-paid-for benefits during the salary continuation period stop.
Some employers will concede this request in order to make a departing worker feel that he or she was treated fairly during negotiations. It is one of the most important benefits you can ask for and is often granted by an employer. Always ask for this during negotiations where appropriate.
Although most plans terminate automatically at the date of your discharge, inquire if you can assume the policy at your personal cost and find out the required time frame to implement coverage. This is referred to as a conversion policy. Such policies may also apply to long and short-term disability insurance and life insurance plans in existence at the time of your firing.
If you are married and your spouse is working, you may be covered under your spouse’s policies. If so, you may not want to continue paying for your own policies.
Be sure the employer has notified you regarding your COBRA rights. This must be done in writing within 30 days after you are fired and you then have several weeks to advise the company in writing if you will continue your health benefits. If you desire to continue coverage, you should promptly remit the first month’s premium.
Under federal law, private employers who employ more than 15 workers on a typical business day must continue to make group health insurance available to workers who are discharged from employment. If you work for a smaller company, you may still be protected under state law. Check your local Department of Labor or department of insurance for details.
Most people benefit from COBRA, since the cost of maintaining insurance is reasonable; rather than the cost of an individual policy, you pay for coverage at the employer’s group rate plus a 2 percent administrative fee.
If you don’t receive the initial COBRA notification letter from the ex-employer immediately after a firing, call the company and speak with the person in charge of benefits or personnel. Demand to receive a formal notice. This is your right. To ensure that your coverage will not lapse, send payments directly to the ex-employer (not the insurance carrier unless you are instructed otherwise in writing) regularly and timely.
Never ignore the notice once it is received. Send your initial check back immediately with a letter by certified mail, return receipt requested, to prove delivery. Make a copy of your check and letter and keep the canceled check as proof that payment was made and received. Contact the insurance company separately to verify that the carrier was notified that your payment was received. You can’t do enough to ensure that your coverage exists and is being maintained.
Under the law, all employees who are discharged as a result of a voluntary or involuntary termination (with the exception of those who are fired for gross misconduct) may elect to continue plan benefits currently in effect at their own cost provided the employee or beneficiary makes an initial payment within 30 days of notification and is not covered under Medicare or any other group health plan. The law also applies to qualified beneficiaries who were covered by the employer’s group health plan the day before the discharge. Thus, for example, if the employee chooses not to continue such coverage, his or her spouse and dependent children may elect continued coverage at their own expense.
In the event the employer fails to offer such coverage, the employer may be required to pay the employee a penalty equal to $110 per day for each day the employee is not covered.
Due to burdensome record-keeping requirements, it isn’t surprising that many companies run afoul of the law and fail to follow properly rules regarding notification requirements, conversion privileges, excluded individuals, and time restrictions, because the law does not provide much guidance or instruction. In fact, good-faith compliance may not be sufficient to protect the employer, as a California ruling demonstrates. The employer, a mental health residential treatment facility, offered its two health care plan options to a laid-off employee. When the plan chosen by the ex-employee went bankrupt, only the second plan (an HMO) remained. All current employees of the company were in the plan’s geographic area and they signed up with the HMO. Since the ex-employee lived outside the area, she was left without any health continuation coverage. She sued her former employer for the health care coverage that was her right under COBRA and prevailed. Although IRS regulations require only that COBRA coverage be the same as insurance offered “similarly situated beneficiaries” as the employer argued the US. District Court ruled that the employer had not satisfied its obligations.
The law is now being interpreted very broadly, and the courts are ruling regularly that COBRA coverage be provided. Because the cases typically pit a former employee or an employee’s dependent with substantial medical expenses against the employer or an insurance company, many courts are willing to interpret and apply COBRA with a view toward extending coverage wherever possible.
In one case, an employee incapacitated by a series of strokes was maintained on her employer’s group health insurance policy. After about a year, the employee was taken off the company rolls. At that time, she was in a coma and the COBRA continuation notice was sent to her husband. Misunderstanding the intent of the offer, and thinking his wife was still covered under the employer’s group plan without premium payments, he waived his wife’s insurance continuation rights. Later, as legal guardian, the ex-employee’s husband tried to regain the option of COBRA coverage, but the insurance company refused. The husband sued and won; the court ruled that the employer should have included the summary plan description with the COBRA notice sent to the husband and that without the summary he was unable to make an informed decision.
Be sure you know your rights under COBRA in the event you are fired. This is especially true if you or a spouse or dependent is sick and needs the insurance benefits to pay necessary medical bills. You are entitled to such protection even if you have worked for the employer for only a short period of time. In fact, under the law as it presently exists, most short-term employees can generally enjoy COBRA protection for periods exceeding the length of their employment. The only requirement is that you must have been included in the employer’s group plan at the time of the firing.
Remember, however, that you may not be able to obtain benefits if you are fired for gross misconduct. This term is relatively ambiguous; the burden of proof is on the employer to prove that the discharge was for a compelling reason (fighting on the job, stealing, working while intoxicated, etc). Also be aware that some employers reduce a person’s working hours to a point that makes them ineligible for group health coverage.
If an employer refuses to negotiate continued health benefits as part of a severance package or fails to notify you of the existence of such benefits, contact the human resources office immediately to protect your rights. If the employer refuses to offer continued COBRA benefits after a discharge for any reason, consult an employment attorney immediately.
For a full depth analysis on this topic and many more, visit http://legalstrategiespublishing.com/ to purchase “The Employee Rights Handbook” today!