Insurance smarts during a layoff: 3 must-do moves

By Lynnette Khalfani-Cox Posted : 11/30/2011

man packing up after losing jobWith high unemployment, job security has sunk to its lowest level in decades. With one month remaining in 2011, job cuts for the year total 564,297, surpassing the 2010 year-end total of 529,973, according to a report by outplacement consulting firm Challenger, Gray & Christmas. The 11-month total is 13 percent higher than the 497,969 job cuts announced over the same period a year ago, according to the report.

Let Insurance.com help you find affordable life insurance now.

For many U.S. workers, one of the big worries about losing a job is the loss of benefits that go along with employment – perks like life insurance and health insurance.

But even if you lose your job, there are several smart moves you can take to mitigate the financial toll on your family.

Here are three must-do steps that will keep your various forms of insurance coverage intact during a layoff.

1. Ask for an extension of health care benefits

If your job is eliminated, always ask your employer to extend your health insurance by three to six months, recommends Kate Wendleton, president of The Five O'Clock Club, a national outplacement and career coaching organization.

"When you're stunned by a layoff notice, you probably won't ask for it on the spot," Wendleton notes. "But you can always go back and say 'I've had some time to think about this and the two most important things to me are outplacement help to aid me in finding a new job and health care coverage for the period when I'm unemployed."

For many workers, three months is a good starting point for extended health care benefits following a layoff. More senior employees should ask for at least six months of additional coverage to tide them over until they find a comparable-paying job.

2. Negotiate for your employer to pay COBRA insurance premiums

If you have months of advanced notice about a layoff or if your company already has offered to extend your health care benefits by a few months, try to get your employer to pick up the tab for your COBRA insurance premiums.

By law, after a downsizing you're entitled to health care coverage via COBRA for 18 months. But employers make you pay for that. Still, there's no reason you can't negotiate to have your employer pay your COBRA costs as part of your severance package,. At least inquire about whether the company will pay for some of the bill. If the employer pays the premiums directly, it won't be counted as personal income and you won't be taxed on that money.

"We have seen laid-off people whose companies have paid for COBRA," says Wendleton. "Paying a couple of hundred dollars a month is practically nothing for a company, but it's huge for your budget."

The key to getting those COBRA premiums paid is to be "pleasantly persistent" in making your requests, Wendleton says. Don't just ask once and expect to get a "yes." Be prepared to follow up, and maybe even put your request in writing to your superiors or the company president.

Explain your situation simply and honestly. Perhaps in addition to the layoff, you're dealing with aging parents who rely on you financially or a sick child who needs medical care. Don't be embarrassed to divulge this information.

"You have to remind your employer that compassion is in order and that you are a real person who's being affected by this layoff," Wendleton says.

3. Convert group life insurance or group disability to an individual plan

After a layoff, find out whether it's possible to change a group life insurance policy or a group disability plan to an individual one. If you're young and healthy, you can likely find cheaper life insurance quotes on your own. But others may not be assured of that.

To avoid unnecessary risk, convert right away – if only to act as a bridge until you get a new job or secure a better insurance policy on your own. One reason to act quickly is that insurers often require you to convert a life insurance policy within 31 days of leaving an employer.

No matter the situation, don't feel reluctant or scared to negotiate for a better severance package, including stronger insurance protection after a termination.

"You can ask an employer for anything," says Wendleton. "What are they going to do: fire you?"

Related Articles on Insurance.com

1 Responses to "Insurance smarts during a layoff: 3 must-do moves"
  1. christine raynor 08, Apr, 2013

    My son was laid off just as he became eligeble for health insurance due to the layoff they did not follow thru with the filing. He is now rehired will he have to wait another 3 months or will he be eligeble right away?

      Reply»  

What do you think? You can add a helpful comment to this page by filling out the form below.
Just looking for a quote? Click here
 
 
 

Quote & Compare

Want to bundle home and auto insurance for potential discounts?

Thanks,
you're all set.

One of our newsletters
should arrive in your inbox
soon - keep an eye out for it!