Protecting Pension and Health Care Benefits After Job Loss
Job termination or a reduction in hours may result in a loss of pension and health benefits. You have rights under the Employee Retirement Income Security Act of 1974 (ERISA) which are designed to help employees and their families cope with employment change.
The Consolidated Omnibus Budget Reconciliation Act of 1985 — commonly called COBRA — may allow you to purchase extended health care coverage. The Health Insurance Portability and Accountability Act of 1996 — known as HIPAA — protects you and your family from discrimination because of pre-existing medical conditions.
You may be able to purchase extended health care coverage under COBRA if your job ended for any reason other than gross misconduct, or if your hours were reduced. To qualify, your employer must have had 20 or more employees, you must have been a participant in your employer’s group health plan, and the employer must continue to maintain a health benefit plan.
Once your job ends, your plan must provide you with written notice explaining your rights under COBRA. You have 60 days from the date the notice is provided or from the date coverage ended — whichever is later — to elect COBRA coverage. It begins the day your health care coverage ended and lasts for up to 18 months (and longer in some cases). You should also know that under COBRA you may have to pay the entire group rate premium for health care coverage.
HIPAA requires that most plans provide coverage for pre-existing medical conditions after 12 months (in most cases). Further, HIPAA requires a new employer’s plan to offset this 12-month exclusion period by giving you credit for the number of days you had previous coverage — unless you had a major break in coverage. Your former employer is required to provide a certificate that documents your “creditable coverage.”
If you lose your job, request a copy of your plan’s summary plan description (SPD) and ask for an individual benefit statement. If you were an active participant in your employer’s pension plan, you may be eligible to roll over your vested pension benefits to an Individual Retirement Account (IRA) or to a new employer’s retirement plan. See your SPD for details.