When an employee is terminated or leaves your employ, you will have to do two
or three things:
- terminate the employee's benefits coverage
- provide the employee with a certificate
- offer to extend the employee's health benefits under COBRA
(this is only required of employers with 20 or more employees)
Terminating benefits is generally a simple process. The insurer will usually
provide you with a form or procedure for terminating the coverage of an
employee. Generally, the insurance company will terminate coverage at the end of
the month, not in between, to make premium remittance easier. Some have a policy
that, if an employee leaves before the 15th of the month, they will waive
premiums for that month; for those employees who are terminated after the 15th
of the month, the whole month's premium will be due. Be sure to know your
insurer's policy on this.
If Joe has health benefits with you and quits work on June
8th, the insurance company will discontinue his coverage at the
end of June. You will be required to pay for that month.
If you paid for coverage in advance (i.e., June premiums in
May), you can stop deducting health premiums from Joe's checks.
If you pay month by month, you may have to make the payment for
the whole month despite the fact that Joe is gone, and that
includes deducting enough from Joe's last check to cover his
premiums for the whole month.