Your head spins as you hear the HR director say the dreaded words; “Reduction in Force”. Your first thought is “What will we do without health insurance?”
You take a breath and ask:
Is the company offering you any severance? Will you be paid for your accrued vacation and personal time?
Will they write you a recommendation letter? How can you be sure to secure your 401K benefits?
And, most importantly, if you had health care benefits; how long will the company pay for those benefits, are you eligible for COBRA, and if so what is the contact information of the plan administrator in case you have any questions?
Being laid off is an emotional and economic land field. Thankfully there are some tools in place to help you get through it.
COBRA, a budget bill passed into law in 1986, created the option for those who lost or left their jobs to keep their employer-provided health coverage for up to 18 additional months if they paid the entire premium themselves.
The law states that COBRA must offer the same uninterrupted health coverage plan, and not allow disqualification for pre-existing conditions, so to many, it is the best option for continued health coverage while searching for a new position with benefits or securing insurance elsewhere.
Eligible beneficiaries (those who were enrolled in the group plan prior to being laid off and were voluntary or involuntarily terminated for reasons other than gross misconduct, or received a reduction in the hours of employment) are given at least 60 days to elect to accept coverage. The clock starts from the date your insurance coverage terminates or the date the election notice is provided by the employer or plan administrator.
You should receive your election notice for COBRA within 14 days after the the plan administrator was notified of the qualifying event. To be safe, it is probably best to start counting by whatever date occurred first to ensure that you do not get caught tied up in between all the red tape.
Unfortunately, the combination of losing employers subsidy for premiums in conjunction with the lost job income often makes COBRA unaffordable to many who qualify for its benefits. But, thankfully, for those involuntarily laid off between September 1, 2008- December 31, 2009 some relief has come.
Trying to ease some of the burden, on February 17, 2009, President Obama signed into law a new provision allowing eligible workers to receive a 65 percent subsidy toward their COBRA continuation premium for up to 9 months. For example, if the COBRA premium for your family is $1300 per month, under these terms, you would only be responsible to pay $455 per month for the allotted 9 months.
Since the law is in its infancy and the logistics are still being worked, your best bet is to call your plan administrator to make sure they send you the proper election information so you apply for the savings. Don’t worry if you have to be a pest, in this case, it will be worth it to you and your family.
For more information about the Continuation Coverage Assistance mentioned above, visit:
http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.html
http://www.dol.gov/ebsa/COBRA.html
If you were laid off prior to September 1, 2008, there are other options to explore.
You can research individual plans, (though they may be expensive and offer less coverage), state continuation plans (http://www.nahu.org/consumer/healthcare/topic.cfm?catID=180, groups or non-profits that offer health care coverage subsidies or discounted plans, and ask if your state has a division of insurance (http://www.nahu.org/education/statedept.cfm that can provide you with more information.
If those leads run dry, you might also be able to find short-term medical insurance options (mostly catastrophic policies- such as Golden Rule – http://goldenrule.com/health/continuity.shtml, create an S-Corp and a group of one policy, or find an insurance agent who is creative and has knowledge about other options in your area.