Legal Question in Employment Law in Pennsylvania

Re: Worker Short term lay off & Benefits

You asked about health insurance when a person is laid off.

Under the COBRA (Congressional Omnibus Budget Recovery Act) an employer must offer to continue benefits for a person when that person ceases to be a member of the class. In other words, no matter why an employee leaves employment that employee still has the option to continue insurance.

The employer has a deadline before which it must provide the employee with the information about maintaining coverage under COBRA. The COBRA coverage must be offered to the employee at the rate that other members of the class pay plus a 2% administrative fee. For example, if your employer pays 80% of your insurance premium when employed and $100 is taken from your paycheck as your portion of the premium then the COBRA coverage will cost you $501.

But, if an employer cancels a plan (as to the entire class), as usually happens when an employer is going out of business or files for bankruptcy protection then the employer does not need to offer COBRA coverage. There are some exceptions where the insurer can be forced to maintain or issue a policy, but these exceptions would be at market rates (individual policy) and not the plan rate.

Any covered expenses that occur between the period where the employee became eligible for COBRA (termination) and when the COBRA coverage was activated is eligible for retroactive coverage. One thing to look for is that the actual plan policy should be terminated as of the date through which the premium was paid. In other words, if you recieved a paycheck and were terminated on the 5th of the month and that paycheck deducted your premium for that month then your insurance should remain in full force and effect through the end of the month. The employer's deadline to notify you of your COBRA options would be measured from the date of termination. It is important that you notify your intent to activate COBRA coverage within the time stated on the forms. This normally requires two months of the premium paid within 60 days of being notified of coverage options.

If there is any discrepenacy about coverage do not hesistate to contact me. The law is clear about employer's duties and penalties for failure.

Regards,

Roger