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A Guide to Employee Terminations

As the end of the school year approaches, many benefit administrators are thinking about the upcoming TRS Medical and supplemental benefits enrollment this summer. Before you can devote yourself to the new year, you still need to do a little clean up on your benefits from the previous year. It is important to accurately terminate any employee not returning to work in the new school year in the proper way.

Terminating in THEbenefitsHUB

If you are using THEbenefitsHUB (aka the HUB) for your benefits enrollment and administration, you have a two-step process to terminate your employee properly. First you must terminate the status, then you will terminate the benefits. It is important to do this in the proper order so that your employee does not lose access to benefits at the improper time or affect their COBRA eligibility.

A quick step process for this:

  1. Terminating Employee Status
    1. Go to the Employee Administration page and select the appropriate employee.
    2. Select Personal Information tab, the select Status.
    3. Change the status to Terminated. Do not use the “Retired” option at this time. Using this will not send the appropriate information to the carriers.
    4. Choose the Termination Type. Voluntary is a standard option, while Involuntary can be used when necessary.
    5. Choose Reason for Status Change. Typically, you will choose Termination, however you can use any of these options. You can also add notes in this section if you think they will help you in the future.
    6. Set Status change Effective Date. This date needs to be the LAST day of the month in which they stop working. You can use the actual date if you wish, however many people find it easier to just use the last day to keep things simple.
    7. Press Save, then click OK in the browser pop-up.
  2. Terminating Employee Benefits
    1. Change the Termination Date on all benefits to the LAST day of the month of termination. This date must be the last day for benefits to terminate properly. The appropriate date will auto-populate in the date field.
      • If an employee is keeping medical coverage until the end of the plan year. Input 8/31 as the termination date for that item.
    2. Press Save.

Please make sure you are terminating in a timely manner. If the employee is keeping all benefits until the end of the plan year, you should wait until around 60 days from the last day of employment to terminate the employee.

You also need to remember to add a journal entry to the employee profile. Do this by going to the employee menu and selecting Personal Information and selecting Journal.

Terminations and Your Benefits Bill

Failing to terminate an employee the proper way will cause discrepancies on your FBS bill. For billing purposes, it is important that your employees are terminated on the last day of the month. As an example, if you terminate an employee on the first day of the month following their last day, you will be billed for an extra month. This is the case for mid-month termination dates as well. Due to the fact insurance carriers do not accept partial premiums, clients are expected to remit payment for the all premiums billed by FBS until the end of the month of an employees’ termination regardless of termination date or pay schedule.

Many carriers will accept what is called a retro-termination up to 60 days after the termination date. If a carrier does not approve a retro-termination, then you will be responsible for remitting payment for the full billed amount. If you are terminating your employees in a timely fashion, this should not be a problem.

Benefits After Employment

There are resources that will help both you and your employee after they leave your company:

  1. Updated contact information in the HUB: Employees do not have access to the system after they are terminated, so you will need to make sure to keep this as up to date as possible. The most important items are the personal mailing address, phone number, and personal email address.
  2. A copy of the Consolidated Enrollment Form: This form will show your employee all the benefits they had before leaving the district as well as their monthly premiums. Knowing this will help your employee make informed decisions about their COBRA coverage or other future benefits.
  3. Continuation of Coverage flyer: This flyer is located on your benefits website home page. It explains all current carrier policies as well as contact information for each of them. This flyer is another key element in helping employees continue eligible benefits post-employment. It will also tell you if each of these benefits are either portable or convertible. Please note: employees have a very limited time-frame to sign up to continue their coverage.
    • Portability vs. Convertible: Portable products allow you to remain in the group plan and you are subject to all group changes. Convertible products are turned into individual plans and you are no longer subject to group rules or changes.
  4. FBS Exit Package: FBS has developed a supplemental benefits package designed for anyone that is no longer eligible for group coverage. These could include retirees, overaged dependents, parents living with employees, and any number of individuals. Please note these are not designed to replace any major medical coverage. These plans are offered to former employees after a district has given us permission to reach out to them.
  5. COBRA Coverage: After you have terminated an employee in the HUB, the termination is sent to the insurance carriers and COBRA administrators. The COBRA administrators will send your employee packets of information on how to continue their current eligible benefits. Benefits that are typically eligible for COBRA are dental, vision, medical, medical supplement, and FSA. Please note, a FSA can only be continued if the employee has contributed more than they have use throughout the year. For example, if they elected a total benefit of $1200, they have contributed $1000 and have only used $800 then they are eligible to COBRA their FSA through the end of the plan year.

We know this is a lot to remember, so we have created a handy Employee Terminations Checklist to help you remember all the steps and resources covered in this article.

If you have any questions about terminating an employee properly in THEbenefitsHUB, please feel free to contact your Client Service Representative for assistance. If your group is in need of a consultant devoted to helping you understand benefits, contact us today.