Highlights:

• Effective management of COBRA benefits is crucial, providing continuity and reducing stress for affected individuals.
• Thoughtful handling of employee layoffs can significantly influence an employer's reputation and future hiring prospects.
• COBRA benefits play a vital role in supporting individuals after a layoff, ensuring continuity of healthcare coverage.
• HR leaders can improve communication and compliance by leveraging third-party administrators and benefit management platforms.

More than 185,000 employees in the technology industry have been laid off since the start of 2023. And layoffs are hitting many, if not all, sectors, with some organizations reducing staff by thousands, marking difficult times for everyone impacted. Organizations must release employees during hard times with the same attention and consideration as they welcome new employees during better times.
 

While organizations are looking to reduce costs, they must ensure that employees being let go are treated with respect and care, making sure benefit continuations are managed the right way.

How an employer manages layoffs and continuation of benefits now can impact its hiring down the road, so treating this process with thoughtfulness toward the employee is crucial. Employers don’t want to be lumped into the group that lays off employees via mass Zoom calls or automated voicemails or sends severance pay without prior notice. To maintain a strong employer reputation, Human resources (HR) leaders should ensure they are taking a comprehensive and conscientious approach that includes timely and empathetic notice of termination and clear direction on how benefits will be handled.

Once employees have been notified, employers can start managing severance pay, continued healthcare coverage, and other rollover benefits. Beyond policy requirements, employers can go a step further in their reputation management by offering services such as career counseling, job search assistance, resume workshops, and financial guidance.

One of the most important aspects of managing layoffs the right way is by providing an effective COBRA benefits process. The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20 or more employees to continue offering group health insurance to employees and dependents at the time of a qualifying event. Qualifying events include the death of the covered employee, a covered employee’s termination of employment, the covered employee becoming entitled to Medicare, and a spouse’s divorce or legal separation from the covered employee.

COBRA health insurance supports those impacted by the qualifying event by allowing them to continue with the same physician and health plan. This helps to limit stress following a layoff by removing the need to adjust the beneficiary’s entire healthcare network. According to a recent Alegeus survey of 1,096 American adults, nearly half (47%) would be willing to pay a higher premium to stay on their current health plan.

For employers, COBRA has long been a time-consuming and complicated process. According to the same Alegeus survey, 41% of employees are not familiar with COBRA as a continuation of health coverage, and 33% feel that their employer is responsible for explaining the coverage to them. Employers bear some responsibility, as COBRA has communication requirements (although many employees are unaware of these requirements).

To avoid penalties or fines for miscommunicating COBRA benefits, HR leaders should seek guidance from third-party administrators and utilize benefit management platforms to present a consolidated, simplified solution to close administrative gaps and increase beneficiary satisfaction.

By utilizing these solutions, HR leaders can bridge the gap in benefits education by preparing and distributing qualifying event notifications, tracking applicable time frames for COBRA continuants, and directly billing continuants. Additionally, it will help manage notifications for the cessation of benefits, termination of coverage, opening and closing of open enrollment, and plan or premium rate changes.

As there’s no one-size-fits-all solution when it comes to layoffs, leveraging a combination of third-party administrators and benefits management solutions will ease the burden on HR leaders managing this process. HR leaders, in turn, will be better able to treat impacted employees with the dignity and respect they deserve while preserving the company’s reputation as a good employer even when times are tough.

Author Bio

Anna Lyons is the Chief Talent Officer at Alegeus.

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