Cobra Language In Severance Agreement

The Tribunal stated that employers were not required to ensure that COBRA notifications were actually received and found that the employer and benefit manager had provided uncontested evidence that they had sent two COBRA voting notifications to an address that the employee had confirmed was correct and that the employee had not chosen COBRA coverage. However, there remained a dispute as to whether the premium deductions constituted a waiver of cobra`s voting obligation to vote on the severance contract, so the court granted that right. In the future, employers who have traditionally offered temporary cobra benefits as part of a compensation package should consider an alternative to reduce the risk of confusion and conflict due to the time problems of the ACA and COBRA. One of the ideas is that the employer proposes an after-tax cash payment corresponding to the amount of monthly cobra premiums that the employer would have paid for the employee`s benefit. The employee can then use the funds as he sees fit, for example: corporate events such as mergers and acquisitions often signal growth, but also often result in unavoidable layoffs when positions remain duplicated or new executives make changes. To facilitate the transition of laid-off workers, employers often provide severance pay and sometimes pay part of the health care for a specified period of time. However, the language of the redundancy agreement and seemingly small details related to the company can give very different cobra results. While Downsizing can bring you down, don`t stumble on these three COBRA errors. There are several ways to treat COBRA in a severance situation. Incorrect documentation can lead to unintended consequences such as delaying COBRA`s launch date. One can think of an employer wishing to pay the employer part of the health insurance of a dismissed worker for 12 months after the dismissal.

Let`s look at two scenarios. Think about the situation in which an employee will be fired in mid-February. Under a redundancy agreement, if the employee chooses COBRA, the employer pays a large part of the COBRA premium for three months – until the end of May. After three months of COBRA, the employee must pay the full COBRA premium of 102 percent. The employee intends to choose COBRA for the three months the employer contributes to the premium, then enroll in a Marketplace plan and use subsidies to reduce monthly premiums. Employers often intend to provide subsidized health care as part of a worker`s severance pay or job reduction. In a classic case that proves the maxim „don`t go unpunished,” failure to address the cobra effects of the agreement can create a risk of compliance. The following two examples illustrate the risk: scenario #1: The agreement provides that the termination of the employment relationship results in a loss of coverage for COBRA purposes and that the employee must choose COBRA to pursue health insurance.