Severance negotiation and COBRA coverage

[d4]

If you've never been on COBRA, get ready for sticker shock. Especially if you have kids. Hopefully the severance will cover the COBRA premiums, and you'll at least break even.

[ADent]

Luckily my old company continued health care until the end of the month.

You can retroactively sign up for COBRA - expect pain for any medical claims until you actually sign up (and it propagates thru the computers).

[M A V I C]

ADent wrote:
Luckily my old company continued health care until the end of the month.

My understanding is your current plan goes through the end of the month regardless. Eg, if you're laid off on March 31st, your insurance expires on April 1. But if you are laid off on March 1, your insurance still expires April 1.

[d4]

M A V I C wrote:
[quote=ADent]
Luckily my old company continued health care until the end of the month.

My understanding is your current plan goes through the end of the month regardless. Eg, if you're laid off on March 31st, your insurance expires on April 1. But if you are laid off on March 1, your insurance still expires April 1.
This is a great point. The last time I was laid off 10+ years ago, the company did me the "favor" of making my official layoff date the first of the month. Keeping me on the payroll for a few extra weeks so I could keep my health insurance an extra month. They didn't have to do that.

For the OP, this might be something to ask about since it's a week 'til May1.

[anonymouse1]

This is a negotiation. What you can get depends on what they want and how much they want it.

If they want an NDA really really badly, they will be willing to give you more. If they don't care about the money that much, they will be willing to give you more.

My approach, which recently worked very well for me in a non-work negotiation, is "This has been a good relationship; I've enjoyed working here, and I think my work was well regarded. I'd like to be able to say good things in the future, or sign the NDA. While I appreciate the severance package, tight now, it doesn't work for me.

What I need is ($X, health care Y, whatever else Z). I hope we can reach agreement on this, so that we can continue our good relationship going forward.

You're entitled to the COBRA no matter what, I believe, or you could go on the Obamacare marketplace, because this is a life event (you should double-check that). They can certainly withdraw the severance package if they want to to, based on your negotiation. I think that's unlikely-I had a severance package one time where I politely asked for double the money. They turned me down, but didn't withdraw the package.

The real issue for you is whether you're willing to walk away from the package. If you are, you could make initial pitch stronger "I want you to know that this just isn't acceptable to me, and if this is your final offer, I won't be accepting it. I hope it doesn't come to that, as I'd like to continue our good relationship."

Hope this is helpful.

[Ombligo]

Insurance is paid in advance. So if you were paid weekly, you usually will have coverage for two weeks; paid every two weeks? then it will be a month.

I would immediately go to the marketplace and see what the options are, pre-existing does not matter. You will want to put in your doctor's name, medicines, etc for filtering to plans that work best for you. What I found when I retired is that the premiums came down from COBRA but the deductible went way up. In the end, it essentially came out the same.

[mattkime]

If I remember correctly, you don’t have to buy cobra right away. I think you might have a few months. In fact, you can buy it retroactively in that window should you incur a significant medical expense. You might save a nice chunk of money this way, but verify this plan first.

[Bill in NC]

d4 wrote:
If you've never been on COBRA, get ready for sticker shock. Especially if you have kids. Hopefully the severance will cover the COBRA premiums, and you'll at least break even.

Kids may be eligible for CHIP:

https://www.medicaid.gov/chip/index.html

[Will Collier]

M A V I C wrote:
[quote=ADent]
Luckily my old company continued health care until the end of the month.

My understanding is your current plan goes through the end of the month regardless. Eg, if you're laid off on March 31st, your insurance expires on April 1. But if you are laid off on March 1, your insurance still expires April 1.
This varies from company to company. Ask before setting your last day how long the coverage lasts, don't assume it's going to be good through the month (or whenever).

[dk62]

As mentioned by several people, severance is company's good will, or, more commonly, insurance that you will not sue them for wrongful termination (despite the "employment at will" clause in the original employment agreement).

COBRA vs ACA will depend on many things. ACA is going to depend on your annual income and, depending on amount of severance, can be prohibitively expensive. COBRA can as well - it is basically continuation of the coverage that you had so far, but with you also paying the part that the company was paying. In my case, it went from $250 to $2300/month, and was still lower than ACA (my severance was unusually substantial, "voluntary early retirement").

One thing that really upset me - once my new job's insurance kicked in, COBRA became void the very same day, but you do not get any partial month's refund. And they absolutely do not cover anything that happens after the new insurance is active. So they get a lot of money for the last month with no liability. I was actually trying to postpone the start day of my new insurance as COBRA was better, but turns out you cannot do that.