DataPath Article on COBRA Eligibility for Furlough vs a Layoff Featured on BenefitsPro

While they may seem similar, there is an important difference between getting furloughed and being laid off.

May 27, 2020

By Bo Armstrong

Originally Posted on BenefitsPRO

COBRA Continuation Benefits: Furlough vs Layoff

The current economic situation caused by COVID-19 safety measures has millions of people wondering how they can keep their employer’s health insurance plan. Companies have been forced to furlough or layoff their workforce until the economy improves. In fact, the U.S. economy lost more than 20 million jobs in April. As such, people want to know whether or not they can sign up for COBRA continuation coverage and if they will be able to afford it.

What is the difference between a furlough and a layoff?

While they may seem similar, there is a difference between getting furloughed and being laid off.

furlough is usually temporary, with a specific end date. However, a company can extend the furlough beyond the initial period or later convert it into a layoff. During a furlough, the employee experiences a forced, unpaid leave of absence, but is still considered an employee.

layoff does not include a planned date for returning to work. In a layoff, the employment relationship with the company is over.

How does this affect COBRA eligibility?

Under COBRA law, when an employee or dependent has a “qualifying life event” that causes the loss of health insurance coverage, they have at least 60 days to choose if they want to continue coverage. Examples of a qualifying event include:

  • Job loss (for reasons other than gross misconduct)
  • Reduction in work hours
  • Divorce or legal separation from the covered employee
  • Death of the covered employee

Employees who have been laid off are eligible for full COBRA benefits.

Unfortunately, it is not as straightforward for furloughed employees. The employer decides the amount of COBRA benefits available, usually after consulting its carrier and reviewing its group health plan documents.

Read the full article, COBRA continuation benefits: Furlough vs. layoff, on BenefitsPRO.

proactive approach to employee benefits

Bo Armstrong
Chief Product and Marketing Officer, DataPath, Inc.

Bo has over 20 years of marketing leadership experience. His responsibilities include branding, communications, social media, product marketing, PR and promotions. He focuses on identifying emerging market trends within the benefits industry and advocating for customers and their needs.  Bo is also a national conference speaker and author of numerous whitepapers and articles on the healthcare benefits industry.

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