There are few situations so stressful as facing unemployment. Whether you have been at your current job for 10 months or 10 years, it is difficult to learn that you will no longer have the position at your company. In such circumstances, your employer may offer you a severance package. Companies often do this to provide for departing employees, and more importantly, to avoid liability.
According to Becker’s Hospital Review, 83 percent of medical organizations have written a severance agreement for a CEO. Whether you are in health care or another industry, if your employer offers you a severance package, there are a few things you should know—and you should be sure your package includes the following three provisions.
1. Severance pay
In addition to your final paycheck, a severance package will typically include an additional lump sum payment intended to provide financial security while the recipient seeks another position. It is standard to receive one or two weeks’ worth of wages for every year you have worked at a company, but this could be open to negotiations, and you might receive three or four weeks of pay per year.
2. Health benefits
If you worked with your employer for at least 18 months, the Consolidated Omnibus Budget Reconciliation Act covers you. Also known as COBRA, this law extends temporary continuance of health insurance coverage to departing employees. When your employer no longer subsidizes the policy, it may be unaffordable, so you should inquire whether continued subsidization can be part of your severance.
3. Pension payout
If you also had benefits such as a 401(k), a pension or vacation time, your severance package may include a liquidation of the value of these items. These perks all have a cash value to your employer, so when you are leaving, it makes sense that you may be able to receive at least a portion of this value.