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COBRA and unemployment benefits after a performance-related termination?

Posted by Pattie Hunt Sinacole  March 1, 2010 08:34 AM

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Q I am an 'employee at will' for my current employer. I was recently put on a Performance Improvement Plan that says that I need to meet certain requirements or "actions will be taken including termination of employment." I am working my hardest to achieve these items, but also need to plan for contingencies. If I am indeed terminated for not meeting the requirements, am I still eligible for unemployment and COBRA benefits?

A: Most of us are employees at will. What this means is that our employer can terminate us at any time or for any reason. Additionally an employer can change the terms and conditions of our employment for any reason, including our work hours, location, job responsibilities or benefits.

Although difficult to receive, a performance improvement plan (PIP) is often a sometimes a helpful communication vehicle. It signals that there is a performance concern. Additionally, a well-written PIP clarifies what requirements need to be met for continued employment. I am pleased to hear that you are working your hardest to meet the expectations outlined in your PIP.

I agree that a contingency plan is prudent. Most employers are required to offer COBRA for eligible workers and their dependents the right to continue health care coverage. COBRA only applies to employers with 20 or more employees. Some states, including Massachusetts, require smaller employers (those with 2-19 employees) to offer “Mini-COBRA.”

Health care coverage rates are generally more expensive for COBRA participants than the rates offered to active employees. In part, this is because the employer often pays part of the monthly premium for active employees and their dependents. COBRA participants are often charged the entire premium plus a small administrative fee. Even though COBRA rates can be expensive, the rates are often less expensive than individual health care coverage premiums.

For an employee to be eligible to extend benefits through COBRA, one of the following events often occurs:

1. Voluntary or involuntary termination of employment for reasons other than gross misconduct
2. Reduction in the number of hours of employment

In general, if you are terminated for not meeting a performance goal (and there is no “gross misconduct”), you should be eligible for benefits continuation through COBRA. You would be eligible for the benefits that you had before your termination. For example, if you had individual coverage for medical and dental, you should be offered individual coverage for the medical and dental benefits as an individual (the same benefits that you had when you were an active employee).

If you are terminated, you may be eligible for a reduced COBRA rate (or subsidy) under the American Recovery and Investment Act of 2009 (ARRA). Currently, the subsidy is only available to those involuntary terminated between September 1, 2008 and February 28, 2010. The US Department of Labor provides a lot of information on COBRA at

In Massachusetts, unemployment benefits are available to workers that are unemployed through no fault of their own. Recipients must be available to work, willing to work and looking for a new job. Unemployment is temporary income protection for those residents who have lost a job. Most individuals who are terminated for performance reasons are eligible for unemployment benefits. However, if your former employer is able to demonstrate that you were terminated because of misconduct of a violation of a company policy, you may be disqualified. Visit for more information about unemployment benefits in Massachusetts.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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Patricia Hunt Sinacole is president of First Beacon Group LLC, a human resources consulting firm in Hopkinton. She works with clients across many industries including technology, biotech and medical devices, financial services, and healthcare, and has over 20 years of human resources experience.

Elaine Varelas is managing partner at Keystone Partners, a career management firm in Boston and serves on the board of Career Partners International.

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Stu Coleman, a partner and general manager at WinterWyman, manages the firm's Financial Contracting division, and provides strategic staffing services to Boston-area organizations needing Accounting and Finance workforce solutions and contract talent.

Tracy Cashman is Senior Vice President and Partner of the Information Technology search division at WinterWyman. She has 20 years of experience partnering with clients in the Boston area to conduct technology searches in a wide variety of industries and technology.

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