By: Revanche

Managing benefits when facing a layoff

March 17, 2009

I’ve been doing some research on all applicable benefits that I need to address, secure or continue after the layoff, most of the information I need is available at my employer’s website. I’ve truncated some of the information for clarity’s sake. It’s very important to make these decisions while I have the luxury of time to think about it because the website explicitly states:

Enroll within the deadlines. If you do not act by the deadlines, you will not be able to purchase the coverage at a later date.

Medical and Dental Plans
Coverage ends on the last day of the month in which you terminate.
* You may elect to continue your coverage for up to 18 months (COBRA). HMO participants who exhaust their initial 18 months of COBRA coverage may be eligible for an additional 18 months under Cal COBRA. Your election must be returned to the Benefits Administration office postmarked within 60 days from your termination date or the date of notification, whichever is later. If you do not elect COBRA within 60 days, the COBRA opportunity is forfeited. You will pay the full premium plus a 2% administrative fee.

~ It’d be ideal for me to schedule my last day in the first week of the month if I have a choice. (Doubt it). If I leave due to securing new employment, I should not *fingers crossed* need to worry about COBRA. I’ll keep the paperwork on hand anyway, just in case.

Something I did NOT know before: according to this New York Times article, I should try to wait until the end of the election period to take COBRA to avoid paying for those two months of coverage if possible. If it turns out I needed coverage in Month 1.5 post layoff, I can just make up the two months’ worth of premiums and still be covered. I will, of course, check with the benefits department to make sure that’s true. And get it in writing. 🙂

Life Insurance
Group coverage ends on the last day of the month in which you terminate. Coverage may be converted without evidence of insurability if you apply within 31 days of termination.

~ If I haven’t selected outside insurance by that date, then I’ll convert. For the time being, I’ll apply for supplemental insurance at 5X my current salary in case I want to take it with me. The life insurance quotes I’m getting aren’t so attractive.

Accidental Death and Dismemberment Insurance
Coverage ends on the last day of the month in which you terminate. Conversion to an individual plan must be made within 31 days of termination.

~ Do I really need this?

Long Term Care
Coverage through payroll deduction ends the last day of the month in which you terminate. You can continue coverage by making a direct payment to the insurance company. Your premium remains the same. Contact the carrier directly within 31 days of termination to convert to direct billing.

~ Continuing negotiations with my dad. Better make it snappy!

Old Retirement Plan
If you have satisfied the vesting requirement and the present actuarial value of your benefit is less than $5,000 when you terminate employment, you will need to take action regarding your benefit. If you do not take action regarding your benefit, we will cash out your money to you if the value is $1,000 or less. If the value is $1,001 to $5,000, we will rollover your money into an IRA. If the value is more than $5,000, you cannot receive payment or rollover the benefit but will receive retirement benefits based on its value when you retire.

~ Vesting was dependent on 5 years of employment so I wasn’t counting on this. It was funded entirely by my employer so I wouldn’t be out of pocket but when I got in touch with the plan supervisor, she told me I was auto-vested when they changed our plan. Nice! I will roll it over directly into my Vanguard account, but she won’t tell me how much it’s worth until I know that my time here is done.

Current Retirement Plan
Your contribution to the Retirement Plan will be taken from your final paycheck. Supplemental Retirement Plan contributions are not taken automatically. Contact your investment company or your benefits office to discuss options regarding your retirement account.

~ Simple, I have enough in the these accounts to maintain my relationship with Vanguard after separation.

Flexible Spending Accounts (FSA)
You may submit claims for eligible dependent care services incurred through the end of the calendar year in which you terminate. You will be reimbursed up to the amount remaining in your account. Expenses submitted for reimbursement must be incurred prior to your termination unless you elect COBRA continuation of your health care FSA on an after-tax basis.

~ Will make sure to be seen by all my doctors, have prescriptions filled, and costs reimbursed before we’re outta here. Doesn’t make sense that I would continue FSA on an after-tax basis since the point is that it’s a pre-tax benefit.

Tuition Assistance
If you leave during a semester, you will receive a pro-rated fee bill and are responsible for paying the cost of tuition for the remainder of the semester.

~ N/A for me. Unfortunately, I never took advantage of this benefit.

Looking back, I’ve been quite blessed to have such comprehensive benefits even if I didn’t fully maximize all of them. Other than the health care, the tuition reimbursement could have paid the largest dividends over time in terms of furthering my career if I could have made time to attend classes. On the other hand, I did manage to earn a major raise by working my butt off instead of taking classes, which was hugely critical to my ability to pay the bills, pay down debt, and save so much. If I can land another job with similar benefits, I will definitely take advantage of free (though taxed) education!

3 Responses to “Managing benefits when facing a layoff”

  1. I’m impressed! This is a really good idea.

    Working + school is hard to do, so I think that you made the right choice. Especialy since it let you make more money 🙂

  2. Miss M says:

    I think you are right on the Cobra trick, you might also find new employment within 2 months. Unless you get sick in that time the premium is wasted, I have heard you should try to hold out as well. Cobra is expensive!

  3. Revanche says:

    paranoidasteroid: Thanks!

    I’m still trying to figure out how I’m going to do work+school again since I’m not getting any younger and the “I’m too old to do that” argument is not going to hold water.

    Miss M: Got my fingers crossed that I do find a new job within a few months, even if not the first two months.

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