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The Time Frame for the Termination of Insurance

Leaving a job often means leaving your group health insurance behind, too. The time benefits remain in effect depends on when in the month your separation date falls. Whether benefits terminate depends on your decision on continuation coverage afforded by the Comprehensive Omnibus Budget Reconciliation Act (COBRA). Because insurance plans and individual circumstances differ, check with your company's benefits administrator or human resources department regarding the specifics of your case. However, some general rules cover most situations.

  1. Monthly Cycle

    • Insurance companies typically add and remove subscribers at the beginning of each month. That means if your separation date occurs at the beginning of a month you will continue to have group coverage for the remainder of the month. In some cases, employers pay severance or continuation pay and give additional benefits coverage to those who are being laid off. Always review the terms of your severance with a human resources representative.

    Separation Date

    • Know your separation date. Insurance plans take account of the day someone becomes no longer employed by a company, not the date of resignation or even the date someone stops coming to work. State laws usually require that when an employee gives notice the separation officially occurs at the end of the notice period -- whether or not a company has the person work through her notice period. Therefore, if an employee resigns on June 28, giving a notice date of July 15 -- July 15 is the separation date, even if the company asks her to no longer report to work as of June 29. In this case, insurance should last through July 31.

    Severance Packages

    • Early retirement programs and layoffs can result in special continuations of coverage. When employers continue to pay employees after sending them home, it can count as a continuation of payment and state law may require benefits last as long as payroll continues. Of course, some companies extend insurance benefits as part of the severance package. However, when a company gives a one-time severance payment -- even if it amounts to several months of pay -- it usually terminates the relationship immediately and constitutes separation.

    COBRA Coverage

    • Once separation occurs, employers or their insurance providers must send a COBRA enrollment packet to former employees within a month. This contains information on payment methods and cost of coverage. If an employee elects continuing coverage, it becomes retroactive and covers the time period from the separation onward. Subscribers can receive reimbursements and credit for any medical expenses incurred during this time. However, insurance cards typically do not work during the period between separation and COBRA election and insurers will inform medical providers that a subscriber is uninsured until continuation coverage is activated. COBRA coverage can last up to 18 months.

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