SEVERANCE & COBRA

owenlady

I am trying to find out about severance packages where you include a specified number of months of health insurance coverage. Is the standard practice to keep the ex-employee on the active bill or for the company to pay the COBRA coverage for those months for that ex-employee?

Thank you.

Sally

Our practice has been to pay the COBRA coverage for the former employee. The former employee is required to submit proof each month that he has made the COBRA payment, and then we issue a check to reimburse. That way the person has to go through the process of electing the coverage from the start of when his employment ends.

sonny

We recently elected to give the $ amount = to the cost of the insurance coverage. This way we don't have to mess with it. .he can do with the $ as he choses.

Cheryl S SPHR

In the few times I have had one like this, we handle as Sonny -- pay the employee a lump sum equivalent to the months of COBRA cost and the rest is up to them.

davids

We have done it both ways. In some cases we have kept the employee on payroll and continued insurance. In these situations COBRA would not kick in until we officially separated the employee. In other cases the employee separated and elected COBRA coverage with us paying for however many months of coverage we agreed to.

AJ SPHR

Be careful handling it this way because if the employee is really not active (e.g. terminated) but somehow still on the payroll, he/she may not be eligible for active coverage under your benefit plans. I believe it's always cleaner to process the termination and then pay the COBRA premiums on behalf of the ex-employee. Paying them a lump sum for the dollar amount is taxable income to the ex-employee and they actually make out worse unless you gross it up for taxes.