End of the month?
Most health insurance contracts specify that an employee's coverage will terminate on the last day of the month of the employee's last day of work (e.g., if the employee terminates on the 22nd of the month, coverage terminates on the last day of that month). Check your insurance broker/carrier to be sure this is the case with your contract. The question remains, though, "When is that?"10-month contracts
Most schools issue either 10-month (e.g., September to June) or 12-month (e.g., September to August) contracts to faculty members. Schools using 10-month contracts generally keep faculty members on benefits coverage during the summer months if they have signed a contract for the following school year (even though they are technically not "under contract" during the summer months). However, employees who are not returning in the fall—whether it is their choice or the school's doesn't matter—commonly are taken off active benefits coverage at the end of their contract (e.g., June).
- Pro: Taking these employees off of benefits coverage at the end of June is consistent with end of their employment contract. From a financial perspective, it "saves" the school the cost of benefits coverage during the summer of their departure.
- Con: From the employee's perspective, this may leave them without health coverage during the summer they leave the school (assuming that their new school doesn't begin benefits coverage for them until September).
- Note: If you terminate a departing employee's health coverage in June, make sure that you haven't overcharged them for benefits contributions. If you've already taken 12 months of contributions from them over the 10 months of the contract, you most likely need to refund two months' worth of contributions to the employee (since they were only covered for 10 months but paid for 12).
12-month contracts
If a school issues 12-month contracts (e.g., expiring August 31), it would be inappropriate to end health coverage prior to the end of the contract (e.g., August 31). Therefore, with 12-month contracts, there is—or, should be—very little issue or controversy regarding the end of benefits.
- Pro: From the employee's perspective, they don't need to worry about being left without coverage when changing schools—i.e., there is no gap in coverage during that summer.
- Con: From the school's perspective, this "costs" them an extra two months of health coverage in the sense that they are paying for two months more than they would have if they had used a 10-month contract. However, many schools feel that it is a matter of principle (and thus consistent with their culture and values) to go the extra mile to cover departing employees for a full year (i.e., not to "short change" them simply because they are choosing to move on to a new school).
COBRA
Regardless of whether your school uses 10-month or 12-month contracts, eligible departing employees must be offered continuation of benefits (COBRA) if your school has more than 20 employees (which is the federal standard for COBRA), or if "mini-cobra" regulations pertain to you on a state-by-state basis.
