Do you provide terminated employees with information regarding their employee benefits upon termination? If not, consider doing so now—especially if you typically provide a lot of your benefits information on your intranet site, which employees will lose access to upon termination. Even though there is generally no legal requirement to do so, providing departing employees with a letter that includes important reminders and deadlines related to their benefits is beneficial for two reasons: (1) it will save your HR department time by reducing the number of benefits-related inquiries they receive from former employees, allowing them to focus their time on more valuable tasks, and (2) the letter can help defend against a claim by a former employee who loses benefits because they missed a deadline.
Here is a non-exhaustive list of items we recommend including in your letter to exiting employees regarding their benefits:
Remind them of important dates and deadlines, and provide them with other relevant information regarding their benefits, including:
- The date their medical and other insurance coverages will stop
- Whether their accrued vacation will be paid out
- When they can expect to receive their last paycheck
- If applicable, the deadline to exercise their outstanding stock options
- Their right to convert their group life insurance coverage to an individual policy
- The deadline to use their Flexible Spending Account (FSA) balances
**Note that California recently passed a law that actually requires employers to notify employees starting January 1, 2020 of any deadline to withdraw funds from their FSAs before the end of the plan year, such as when an employee terminates employment.By drafting this letter now, you can get ahead of this requirement!
- If applicable, the date that their non-qualified deferred compensation payments will begin
Provide them with a list of important documents they should be watching for in the mail to prevent employees from inadvertently throwing these important documents away, including:
- 401(k) or pension distribution packets
- COBRA election packets
Remind them to update you and your plan administrators if their address changes (both residential and email addresses), and provide them contact information for whom to send updated information, since you will need this information to send out their final Form W-2 and your plan administrators will need it to be able to provide plan information and notices.
As mentioned above, this is a non-exhaustive list. Consider gathering your HR and benefits professional staff together for a 15-minute brainstorming session about other topics to include.We’re sure you’ll come up with other helpful items.
