Q: We have an employee who is on our medical/dental plan. He went on a 3-month work sabbatical. However, upon his return, he resigned from his position. So, I have a number of questions.
- What do we need to do about this situation in terms of benefits?
- When should he be terminated from the benefits plan given he hasn’t worked for the last 3 months and wasn’t paying his portion of plan contributions?
- Also, when should we issue the COBRA notice?
A: Based on the information you provided, I’m afraid there is more to do in the benefits process.
Depending on your plan summary documents, your employee’s benefits would end on the last day of his employment. If he is owed final pay, your company would deduct his benefits from his pay. Because it sounds like this employee didn’t pay into the plan while he was on sabbatical, or wasn’t billed during his approved unpaid leave, you’ll want to provide him with an invoice for the total amount due for his portion of the benefits premium during that time period.
Also, the employee will not only need to pay his portion of the premium owed for the time he was on leave, but also for the current month if your company offers coverage through the end of the month in which an employee resigns or is terminated.
COBRA should be issued as soon as possible after the termination date, but no later than 30 days after the termination date.
Bottom Line: In this case, benefits management is tricky and it requires some more attention, including collecting plan fees.