The economy is in a tumultuous place as many people are facing the possibility of getting laid off or furloughed in the near future. But these two terms are not the same, and itâs crucial to understand how furloughs and layoffs can impact you and your small business insurance.Â
There are a variety of health insurance options for small businesses, but regardless of the insurance you have, if you get laid off or furloughed during your time of employment, youâre probably wondering how that will affect your small business employee benefits. Keep reading to learn more about the layoff vs furlough benefits below so you can understand how they affect insurance.
After your employer takes you off the company health plan, they are usually still required to allow you to stay on the plan for up to 18 months thanks to COBRA (Consolidated Omnibus Budget Reconciliation Act).
Specifically, the requirement for extending group coverage to a former employee through COBRA is a qualifying event. Qualifying events are any of the following:
As you can see, an employer is required to extend COBRA benefits for at least 18 months in almost all cases when job loss is present. The only time when employers are not required to extend healthcare coverage through COBRA is when employees are fired because of gross misconduct. If your employer potentially disallows health insurance coverage continuation via COBRA on account of gross misconduct, the employer should have guidelines as to what constitutes gross misconduct outlined in the employee handbook.
What Happens to Your Health Insurance After You Leave Your Job?
There are a few different ways you can end up unemployed. How you leave your job is important because it may affect your future options for health insurance coverage:
In all three cases, your former employer has no time-based requirement for keeping you on the group health insurance plan. In some cases, employees are removed from the group health insurance plan the same day their employment ends. Other times, companies may opt to allow employees to stay on the company group health insurance plan for weeks or months after termination. Since the decision is up to the employer and varies from company to company, it’s ideal to understand the specifics before you take a job to ensure you stay on a group health insurance plan for as long as you need to.
COBRA Plan Health Insurance Technicalities
Your employer should inform the health insurance company about your termination within 30 days of your last day of employment. From there, you should receive instructions from the health insurance company on how to continue your coverage via COBRA after your standard employer coverage ends. After receiving these instructions, you will have 60 days to sign up for COBRA benefits. After 60 days, you will lose the option to receive continuation of coverage through COBRA.
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