Severance agreements and COBRA: A guide for employees

If you`re an employee facing a layoff or termination, you may be offered a severance package by your employer. A severance package is a series of benefits and compensation offered to employees who are leaving their jobs, typically due to layoffs or company downsizing. One important aspect of a severance package is COBRA, or the Consolidated Omnibus Budget Reconciliation Act.

COBRA is a federal law that requires most employers with 20 or more employees to offer continued health coverage to employees who lose their jobs. This coverage can last for up to 18 months for employees who are terminated or laid off, and for up to 36 months if an employee loses their job due to a reduction in work hours or job loss caused by a change in business ownership.

If you are offered a severance package, it`s essential to pay close attention to the COBRA provisions included in the agreement. Severance packages can vary greatly from one employer to another, so it`s important to read the terms and conditions carefully before signing.

The severance agreement should clearly state the amount of time you will be eligible for COBRA coverage. If the agreement doesn`t mention COBRA at all, it`s important to ask your employer about it. COBRA coverage can be costly, so it`s essential to know how long you`ll be required to maintain it and how much it will cost.

Another important consideration is whether your employer will pay for your COBRA coverage or whether you will be responsible for the entire cost. Some employers will cover a portion of the cost, while others may offer to pay for the entire plan.

It`s also important to note that if you`re offered a severance package, you must sign a waiver releasing your employer from any legal claims you may have against them. This waiver typically includes any claims related to discrimination, harassment, or wrongful termination. It`s important to consult with an employment attorney before signing any legal document that waives your legal rights.

In conclusion, if you`re an employee facing a termination or layoff, it`s essential to carefully review any severance package that`s offered to you, paying particular attention to the COBRA provisions included in the agreement. Understanding how long you`ll be required to maintain COBRA coverage and how much it will cost is critical information when making financial decisions about your future. Always consult with an attorney if you have any questions or concerns about the terms of your severance agreement.