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What Happens to My Health Insurance if I Settle My Claim?

One of the major concerns any person has when leaving a job, either voluntarily or involuntarily, is what to do about health insurance.  If the employee had health benefits with the employer, there is continuing coverage available through COBRA.  This coverage is typically very expensive as it requires former employees to pay not only the contribution they were paying prior to leaving employment, but the amount equal to the employers’ share as well.

Currently, and until December 31, 2009, a person who is involuntarily terminated, absent gross misconduct, will receive a 65% reduction in the premium amount for COBRA coverage.  This reduction can last for up to 9 months.  Information about this program can be found at www.dol.gov/ebsa/faqs/faq-cobra-premiumreductionEE.html.   This obviously can prove very valuable to those people who are fired after being injured on the job and require medical treatment.  Many people will be able to maintain their health insurance while looking for another job.

Under the terms of virtually every workers’ compensation settlement, the employee is required to resign from employment with the employer.  For most people, this means forfeiting any benefits they may have enjoyed while employed, including health insurance.

Unfortunately, the guidelines for what is meant by involuntary termination in the above-listed website does not specifically address whether a resignation as requirement of a workers’ compensation settlement qualifies.  Based upon what is written, it appears that the Department of Labor would examine each settlement individually to determine whether the resignation was voluntary or not.

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