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Employer cancelled health insurance before lay off Virginia

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  • Employer cancelled health insurance before lay off Virginia

    The morning of July 1st the owner of our urgent care clinic came in and informed us the clinic was being sold as of 1:00 that afternoon, that we were not seeing patients that day and we were all being let go. He told us we were free to apply for employment with the new owner. However, as of that moment we were all no longer employed with his company. I just found out that he had already cancelled our health insurance effective June 30th. Is this legal? I thought that I had read somewhere that if you're let go your insurance would be in effect until the last day of the month that you were let go in.

    And if that's incorrect and your insurance can stop the day you are let go wasn't that still illegal for him to have cancelled it the day before we were let go?

    What recourse do I have with this?

  • #2
    Probably none. There is only one state where the law requires that your insurance be continued until the last day of the month, and that state is not Virginia. Many, many employers have it set up so that coverage ends on the last day of employment rather than the last day of the month. Both ways are common; both ways (in 49 states) are legal.

    As far as coverage for July 1 goes, no, even that was not illegal. There is a difference between what happens when just a couple of employees are let go and when the entire company is sold. In the first instance, he might or might not need to continue coverage depending on what the plan document says about when coverage ends. Contrary to popular belief, there really isn't anything in the law, except in Hawaii and Massachusetts, which guarantees you coverage for the duration of employment, and even in MA there are exceptions to that rule. (There may be in HI too - I've never had occasion to study more than the surface of the law.) But I absolutely-smash-bang-no-holds-barred-guarantee-you that in your plan document, there is a provision that allows the employer to cancel the entire policy, for everyone, at any time.

    Moreover, there is probably something in the terms of the sale regarding the benefits, with the new ower's package taking hold as of July 1, if you are selected for employment with the new ownership.

    All in all, it might or might not be bad management; not enough detail to say. But it's not illegal.
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


    • #3

      Thanks for your reply. It's not what I wanted to hear, but it's what I needed to know, so thanks!


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