Health insurance and employee separation dates

The following is an annual reminder that employee separation and termination procedures must be consistent with State of Illinois health insurance rules. The Department of Central Management Services (CMS) requires terminating employees to be actively working on their last day of employment. 

In the past, some departments allowed terminating employees to extend their last day of employment by utilizing vacation leave, so that the employee could remain covered by State of Illinois insurance benefits. Employees who are terminating may not extend their health insurance coverage by using vacation time to extend their appointment end date. 

CMS rules specify:

  • Members who are resigning from employment or are terminated by the university have coverage through midnight on the last day of employment. 
  • Members may not extend the date of separation by using accrued benefit time.
  • Members who are retiring may not extend their last day of employment with the university by using accrued benefit time. Please see Insurance & Other Benefits in Retirement for work dates necessary to prevent a gap in coverage when a retiring employee is transitioning to insurance coverage as a SURS annuitant.   

What if an employee wants to use vacation time near the end of employment?
It is acceptable to approve time off near the end of employment. Please remember, when approving time off, to ensure that employees who have scheduled vacation close to their separation date also have scheduled active work time for their final days of employment. The employee must be present at work (including working virtually/remotely) on their actual last day of employment.

What if an employee needs to extend health insurance coverage?
Most employees with health insurance, who experience a qualifying event such as termination of employment, are eligible for an insurance continuation program under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Accurate separation processing helps ensure employees receive timely COBRA information from CMS. Remember that all dates in the process must match; the separation date within the HR Front End, the last work day, and job end date should be the same, reflecting the last official day the employee performed service at the University. University Payroll & Benefits (UPB) will submit the last day of employment to CMS, which will also be the effective date for COBRA eligibility, should the former employee need to elect continuation of coverage after termination. 

Please contact for questions.

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