Severance negotiation and COBRA coverage

[gabester]

Hey MRFriends!

A couple weeks ago I found myself unexpectedly laid off. A contract detailing an offer of severance was extended to me... the additional compensation is inadequate. It's better than nothing but...

1) Does anyone here have experience successfully negotiating a better severance on getting laid off?
2) If I try to negotiate with my former employer on the severance - which effectively includes a gag clause to not disparage the company - can they rescind the existing offer without providing something better?
3) My spouse had a childhood health condition that marks her in the eyes of health insurance companies for life - so must I sign up for COBRA to ensure she has continuous coverage?

The good news is I already have a verbal offer of employment for a new gig that almost replaces what I lost so suddenly two weeks ago. Waiting for the official paperwork to come back on that, and I have a few other irons in the fire still for other positions that may leave me better off. If I didn't have this positive news, though, getting more of a severance would be even more important.

Any thoughts, insights, esp. personal experience appreciated!
g=

[gadje]

0) Sorry to hear this

1) and 2) I suggest consulting a lawyer

3) I would say yes, just to avoid any risk. I am not sure if they can deny coverage due to pre-existing conditions (I thought Obamacare did not allow this, but perhaps Trumpcare remove this rule)? better make sure you have continuous coverage until you sort things out.

4) I hope the verbal offer becomes a written offer soon.

[raz]

The Affordable Care Act (ObamaCare) prohibited charging more for pre-existing conditions or for disallowing coverage. Getting laid off is a 'life event', and will allow you to sign off-cycle (i.e. now).

Whether that changes in 2024 is a question for the 'other side'.

Whether COBRA is cheaper than ACA is a different issue. I'm looking to retire in the near future, and COBRA looks to be 2/3 the cost of an exiting plan (not that it's anywhere near 'cheap').

[richorlin]

1 &2 There is no labor law that mandates severance pay. Anything you get is due to the generosity of your employer. You can always ask for more. No guarantee you will get it.

3. When you sign up for COBRA, you are actually continuing the same group health insurance that you had with your past employer. So, if your medical conditions were covered under that plan they will continue to be covered under COBRA..

As for the clause in the severance agreement: it depends on whether you really need the $ and if you really need a good reference. If they have really treated you nicely during you employment and you are parting on good terms, then I see no harm as long it is limited in time; not for the rest of your life.

[Acer]

If the next employer offers insurance, there might be gap in coverage until you get all the ducks lined up for transition. COBRA would be good for that, you can cancel when you get your other insurance. Remember Murphy's Law when it comes to gaps in health insurance.

[numbered]

richorlin wrote:
When you sign up for COBRA, you are actually continuing the same group health insurance that you had with your past employer. So, if your medical conditions were covered under that plan they will continue to be covered under COBRA..

COBRA says the company must offer their insurance...but they can charge the full rate including the part the employer subsidized. If it is a large employer with good demographics (young folks), the rate could be OK. raz pointed out that the ACA marketplaces are the alternative and a layoff allows you to sign up. Since you are getting a new gig, it might make sense to just do COBRA for a month while you get set up in the new plan. (The ACA markets are great, but there is some shopping required in most states since you will probably get offered a dozen plans.)

You should pay close attention to the new health care offer to be sure it is day one coverage, etc. Employer health plans can vary considerably, especially for dependents. (Some companies only partially subsidize dependents for example.)

[M A V I C]

Sorry to hear. As has been mentioned, there's generally no guarantee of a severance package, but it varies by state. I have heard of some times for some companies in some situations, they are required to.

As far as the non-disparagement clause, that's pretty common.

If they're offering to pay for COBRA for a period of time, take it.

Glad to hear you are expecting an offer!

[lost in space]

Definitely do COBRA. Though it's temporary, she'll at least have coverage.

And yes, ACA makes it easy to find new insurance even with a "colorful" medical history as mine. My myriad issues were non-issues. So far this year, I've racked up about $200k in retail costs (whatever retail means), and nary a peep from my new insurance.

[ztirffritz]

As I understand it, severance packages are a goodwill gesture. Unless it's included in a contract, there's no obligation to provide anything beyond a handshake. I was given a generous severance package a few years ago that allowed me 90 days of my salary, plus health insurance, but no 401k match. I had a new job by the end of the week, so I effectively increased my salary by 25% for that year.

[Ombligo]

Also COBRA is not lifetime, it is only good for a max of 18 months.