For MSU Support Staff: Layoff Effect on Benefits Coverage
If you are experiencing a layoff or a reduction in force, you may have questions about your benefits and options to continue coverage. This page helps MSU support staff understand what happens to their benefits coverage during each stage of the layoff process.
Please note: This information is intended to summarize complex information and does not cover all possible scenarios or outcomes, nor does it supersede or replace information in MSU labor union contracts and MSU policies. View a PDF version of the information on this webpage.
Questions: Please contact MSU Human Resources at 517-353-4434 or email SupportStaffLayoff@hr.msu.edu.
Start Here: Benefits Status
Changes to benefits coverage are based on your "status" throughout the layoff process and whether you are still being paid. You typically move through three statuses, each tied to whether pay is continuing:
Still being paid via normal payroll. This includes when you are still working and have not yet reached your layoff effective date; when you are on a paid leave during a layoff notice period; or when you have reached your layoff effective date but are still being paid via vacation quota runout where contracts allow.
On unpaid leave. All vacation accruals have either been exhausted or already paid out, and you are on an unpaid layoff related leave of absence.
No longer have an employment relationship with the university. Your layoff-related leave of absence has ended, and your employment has terminated with no remaining recall rights. Includes those who ended their recall rights early via a Layoff Transition Adjustment Payment (LTAP) where contracts allow or when a vested employee chooses to retire from MSU.
The information below shares what happens to benefits coverage at Active, Inactive and Withdrawn stages. If you're eligible for retirement, you can compare what happens to benefits if you proceed through the layoff process versus if you choose to retire or take a leave to retirement.
Take me directly to information about:
- Health, Dental, and Prescription
- Life and Accident Insurance
- Retirement Plans
- Flexible Spending Accounts (FSA) and Health Savings Account (HSA)
- Voluntary (vision, legal, etc.) and Other Benefits (such as Teladoc)
- Paid Time Off Accruals (personal, vacation, etc.) and Payouts
- Long-term Disability, Workers' Compensation, and Travel Accident
- Tuition Assistance
- Choosing Retirement or a Leave to Retirement
- Billing and Payments if Continuing Coverage through COBRA or Other Self-Paid Options
Health, Dental, and Prescription Coverage
Review what happens to health, dental, and prescription coverage during the three stages of layoff.
| Benefit | Active Status | Inactive Status | Withdrawn Status | Additional Notes |
|
Health
|
Coverage continues as if actively working. No eligibility or premium changes occur at this stage. |
University contribution to coverage stops at the end of the month inactive status begins. You will begin receiving direct billing from Human Resources for any plans you’re enrolled in, and you must pay these invoices to keep your coverage active. Switching to inactive status is considered a qualifying life event, which allows you to change to different plan selections. You must take action within 30 days. |
COBRA is offered to eligible terminated employees and can extend self-paid coverage another 18 months upon entering withdrawn status. |
You will not be eligible for COBRA if you did not maintain coverage during an unpaid leave of absence. COBRA continues an existing plan. It does not restart a terminated plan. During approved FMLA leaves, employer contributions to health, prescription, and dental coverage continues during unpaid leave. Those who are vested and retire will be able to enroll in retiree benefits. |
|
Prescription
|
Coverage continues as if actively working. No eligibility or premium changes occur at this stage. |
University contribution to coverage stops at the end of the month inactive status begins. You will begin receiving direct billing from Human Resources for any plans you’re enrolled in, and you must pay these invoices to keep your coverage active. Switching to inactive status is considered a qualifying life event, which allows you to change to different plan selections. You must take action within 30 days. |
COBRA is offered to eligible terminated employees and can extend self-paid coverage another 18 months upon entering withdrawn status. |
You will not be eligible for COBRA if you did not maintain coverage during an unpaid leave of absence. During approved FMLA leaves, employer contributions to health, prescription and dental coverages continue during unpaid leave. Those who are vested and retire will be able to enroll in retiree benefits. |
|
Dental
|
Coverage continues as if actively working. No eligibility or premium changes occur at this stage. |
University contribution coverage stops at the end of the month inactive status begins. You will begin receiving direct billing from Human Resources for any plans you’re enrolled in, and you must pay these invoices to keep your coverage active. Switching to inactive status is considered a qualifying life event, which allows you to change to different plan selections. You must take action within 30 days. |
COBRA is offered to eligible terminated employees and can extend self-paid coverage another 18 months upon entering withdrawn status. |
You will not be eligible for COBRA if you did not maintain coverage during an unpaid leave of absence. During approved FMLA leaves, employer contributions to health, prescription and dental coverages continue during unpaid leave. Those who are vested and retire will be able to enroll in retiree benefits. |
|
Health Plan Waiver
|
Benefit continues as normal. No changes occur at this stage. |
Plan stops at the end of the month inactive status begins. |
Plan stops at the end of the month withdrawn status begins. |
If the plan is stopped due to inactive status, payout is February of next year per normal process. If the plan is stopped due to termination, the payout is within two months of termination. |
Life and Accident Insurance
Review what happens to life and accident coverage during the three stages of layoff.
| Benefit | Active Status | Inactive Status | Withdrawn Status | Additional Notes |
|
Basic Life Insurance
Prudential |
Coverage continues as if actively working. No eligibility or premium changes occur at this stage. |
Plan stops 180 days from last day paid. |
Plan stops at the end of the month withdrawn status begins. |
Coverage loss results in Prudential notification of porting/converting option. |
|
Optional Life Insurance Prudential |
Coverage continues as if actively working. No eligibility or premium changes occur at this stage. |
Employee is directly billed for coverage first of the following month after the inactive status (unpaid leave) begins. |
If withdrawn status is due to termination, plans end at the end of the month withdrawn status begins. If withdrawn status is due to retirement, if still eligible, Human Resources bills you directly for life insurances 1st of the following month following withdrawn status update. |
At retirement, eligibility and coverage is driven by age (65 and 70). Prudential will contact you directly for options to continue self-paid coverage. |
|
Accidental Death and Dismemberment Prudential |
Coverage continues as if actively working. No eligibility or premium changes occur at this stage. |
University contribution prescription coverage stops at the end of the month inactive status begins. You will begin receiving direct billing from Human Resources for any plans you’re enrolled in, and you must pay these invoices to keep your coverage active. Switching to inactive status is considered a qualifying life event, which allows you to change to different plan selections. You must take action within 30 days. |
COBRA is offered to eligible terminated employees and can extend self-paid coverage another 18 months upon entering withdrawn status. |
You will not be eligible for COBRA if you did not maintain coverage during an unpaid leave of absence. During approved FMLA leaves, employer contributions to health, prescription and dental coverages continue during unpaid leave. Those who are vested and retire will be able to enroll in retiree benefits. |
Retirement Plans
Review what happens to retirement contributions during the three stages of layoff.
| Benefit | Active Status | Inactive Status | Withdrawn Status | Additional Notes |
|
403(b) Base
|
Contributions continue as normal. No changes occur at this stage. |
Employee and MSU matching contributions stop with the last paycheck received and the inactive status (unpaid leave) begins. |
Employee and MSU matching contributions stop with the last pay received and the withdrawn status begins. |
|
|
403(b) Supplemental
|
Contributions continue as normal. No eligibility or premium changes occur at this stage. |
Employee contributions stop with the last paycheck received and the inactive status (unpaid leave) begins. |
Employee and MSU matching contributions stop with the last pay received and the withdrawn status begins. |
|
|
457(b) Deferred Compensation
|
Contributions continue as normal. No eligibility or premium changes occur at this stage. |
Employee contributions stop with the last paycheck received and the inactive status (unpaid leave) begins. |
Employee and MSU matching contributions stop with the last pay received and the withdrawn status begins. |
|
Flexible Spending Accounts (FSA) and Health Savings Account (HSA)
Review what happens to your Health Care FSA, Dependent Care FSA, or HSA during the three stages of layoff.
| Benefit | Active Status | Inactive Status | Withdrawn Status | Additional Notes |
|
Health Care FSA
|
Benefit continues as normal. No changes occur at this stage. |
COBRA is offered through the end of current plan year (not 18 months). |
COBRA coverage, if elected, remains in effect through the end of plan year. |
When switching to inactive or withdrawn status and using COBRA, contributions are no longer pre-tax. The plan is not extended until payment is received. The FSA card will no longer work on COBRA and those enrolled will need to submit claims for reimbursement. |
|
Dependent Care FSA
|
Benefit continues as normal. No changes occur at this stage. |
Plan stops at the end of the month inactive status (unpaid leave) begins. |
Plan stops at the end of the month withdrawn status begins. |
Can still submit eligible expenses up until FSA submission deadline. Cannot submit expenses incurred after plan is ended. |
|
HSA
|
Benefit continues as normal. No changes occur at this stage. |
Plan stops at the end of the month inactive status (unpaid leave) begins. |
Plan stops at the end of the month withdrawn status begins. |
Money or funds are still with HealthEquity. Admin fee by HealthEquity may be charged to those who have money in this fund but are not active employees any longer. |
Voluntary and Other Benefits
Review what happens to your voluntary benefits (such as vision, critical illness, legal, etc.) and other benefits (such as Teladoc) during the three stages of layoff.
| Benefit | Active Status | Inactive Status | Withdrawn Status | Additional Notes |
|
Accident
|
Benefit continues as normal via payroll deduction. No changes occur at this stage. |
After you switch to inactive status, the vendor will bill you directly the 1st of the following month. |
Plan stops at the end of the month withdrawn status begins. |
|
|
Auto and Home
|
Benefit continues as normal via payroll deduction. No changes occur at this stage. |
After you switch to inactive status, the vendor will bill you directly the 1st of the following month. |
Plan stops at the end of the month withdrawn status begins. |
|
|
Critical Illness
|
Benefit continues as normal via payroll deduction. No changes occur at this stage. |
After you switch to inactive status, the vendor will bill you directly the 1st of the following month. |
Plan stops at the end of the month withdrawn status begins. |
|
|
Legal
|
Benefit continues as normal via payroll deduction. No changes occur at this stage. |
After you switch to inactive status, the vendor will bill you directly the 1st of the following month. |
Plan stops at the end of the month withdrawn status begins. |
Retirees can enroll as a retiree with the vendor directly. |
|
Pet
|
Benefit continues as normal via payroll deduction. No changes occur at this stage. |
After you switch to inactive status, the vendor will bill you directly the 1st of the following month. |
Plan stops at the end of the month withdrawn status begins. |
|
|
Vision
|
Benefit continues as normal via payroll deduction. No changes occur at this stage. |
After you switch to inactive status, the vendor will bill you directly the 1st of the following month. |
Plan stops at the end of the month withdrawn status begins. VSP will contact you directly to extend coverage via COBRA. |
Retirees can choose COBRA option from the employee plan enrollment or enroll directly with VSP for the retiree plan. |
|
Teladoc Health Telemedicine |
Benefit continues as normal. No changes occur at this stage. |
Eligibility continues if enrolled in an MSU employee health plan. |
If withdrawn and enrolled in COBRA health, eligibility continues. If withdrawn due to retirement, eligibility ends at the end of the month withdrawn status begins |
MSU support staff and their dependents must be enrolled in an MSU health plan to use this benefit. If enrolled in COBRA health plan, eligibility continues. Those who are retired and enrolled in the non-Medicare plan are eligible for this benefit. |
|
Teladoc Medical Experts |
Benefit continues as normal. No changes occur at this stage. |
Eligibility continues. |
Eligibility stops at the end of the month if withdrawn status is due to termination. Retirees remain eligible. |
Individuals who retire and enroll in an MSU retiree health plan are eligible for this benefit. |
|
Livongo by Teladoc Health |
Benefit continues as normal. No changes occur at this stage. |
Eligibility continues. |
Eligibility stops at the end of the month. |
Available to all benefit eligible employees and their dependents. Retirees and individuals enrolled in Medicare or Medicaid are not eligible. |
Paid Time Off Accruals
Vacation, personal and sick leave accruals and holiday pay will stop while on layoff status. For Clerical-Technical Union employees, holiday pay is paid if the employee is receiving pay the day before and the day after a holiday while on layoff status.
- Vacation time accrued as of the layoff date, will be paid in the payroll cycle, either bi-weekly or monthly, until vacation accruals have been exhausted.
- Personal time not used will not be paid while on layoff status.
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Sick leave is not payable while on layoff, however, a portion of accrued sick leave is payable upon university retirement or termination in the following circumstances:
- Employee meeting the university minimum retirement requirements upon retirement.
- Employees who do not meet the university minimum retirement requirements, but have at least five years of service, and who have attained the age of 65 at the time of separation.
- The amount of sick leave payable varies in each circumstance as specified in the current labor contract.
Long Term Disability, Workers Compensation, Travel Accident
Coverage ends with the last day worked. Part-time employees are not eligible for Long Term Disability.
Tuition Assistance Programs
Review what happens to your tuition assistance benefits during the three stages of layoff.
| Benefit | Active Status | Inactive Status | Withdrawn Status | Additional Notes |
|
Tuition Benefit Program
Formerly known as Course Fee Courtesy |
Benefit continues as normal. No changes occur at this stage. |
COBRA is offered through the end of current plan year (not 18 months). |
COBRA coverage, if elected, remains in effect through the end of plan year. |
If your spouse or dependent child(ren) are already enrolled at MSU using the Tuition Benefit Program, their eligibility will be extended for the upcoming full semester (fall, spring, summer) after the employee's layoff effective date. For more detailed information, please review the Tuition Benefit Program Policy. |
|
Educational Assistance |
Benefit continues as normal if active status when the course begins. |
Benefit continues as normal if active status when the course begins. |
Eligible for benefit use 6 months post layoff (up to normal amount per contract). |
For more detailed policies and application procedures, please see the Support Staff Educational Assistance Program Policy. |
|
Earning service credit toward retiring from MSU to receive retiree benefits |
Functions as normal. The employee continues to earn FTE service months and credit towards meeting the minimum retirement requirements. |
Functions as normal. The employee continues to earn FTE service months and credit towards meeting the minimum retirement requirements. |
If the employee is vested for retirement (meaning they've met one of the two minimum requirements to retire from MSU) they MUST submit their Retirement Form before being terminated to officially become a retiree and earn retiree benefits for which they may be eligible. Those who are not vested for retirement are terminated and not eligible for retiree benefits. |
For employees notified of a layoff that are already vested for retirement (or are soon to be vested), they should be referred to the HR Retirement office to learn about their option to retire instead of going on layoff. Also, if an employee becomes vested to retire while on the unpaid layoff leave (and before they are terminated), they should be referred to the HR Retirement office to learn how to retire and receive any retiree benefits for which they may be eligible (either anytime during the layoff or before they are terminated). |
Choosing Retirement or a Leave to Retirement
If you're experiencing a layoff and eligible to retire or for a leave to retirement, use the following information to decide which option is best for you.
| Benefit | Layoff | Leave to Retirement | Retirement |
|
Health, Dental, and Prescription |
As long as you are being paid (such as during a notice period or paid administrative leave) your benefits continue as usual. Once pay stops and you enter an unpaid leave of absence, the university contribution towards your benefits ends. Human Resources will begin billing directly you to continue coverage. We will begin billing at the beginning of the month following when pay stops. After two years on an unpaid leave of absence, provided you've paid all your bills, you will be offered coverage through COBRA. This will extend your benefits another 18 months on a self-pay basis. |
University contributions towards your benefits will When an unpaid leave to Upon official retirement (at the end of the unpaid leave to retirement), you become eligible for MSU's retiree health and dental coverage. |
Upon official retirement (at the end of the unpaid leave to retirement), you become eligible for MSU's retiree health and dental coverage. |
|
Vacation Time Accruals |
Vacation accruals stop while on a layoff. You can use your vacation accruals or be paid a lump sum payment. The leave of absence then switches to unpaid. | Vacation accruals will be used to maintain pay during a leave to retirement until accruals run out or reach a maximum of 240 hours. The leave then switches to unpaid. View the vacation and sick leave payout chart. | Vacation accruals will be paid in a lump sum after retirement up to a maximum of 240 hours. View the vacation and sick leave payout chart. |
|
Sick Time Accruals |
Sick accruals will stop while on layoff status. Sick leave is not payable while on layoff. A portion of accrued sick leave may be paid upon retirement or termination. Review the Support Staff Sick Time Policy and Procedure. | Half of your sick accruals will be paid out at the beginning of the unpaid leave to retirement up to a maximum of 1200, 1300 or 1400 hours, depending on your employee type. View the vacation and sick leave payout chart. | Half of your sick accruals will be paid out after retirement up to a maximum of 1200, 1300 or 1400 hours, depending on your employee type. View the vacation and sick leave payout chart. |
|
Personal Days |
Your personal time will be paid according to your vacation accrual election. |
Personal time accruals will be used to maintain pay until they run out. The leave then becomes unpaid. |
Personal time accruals will be paid out in a lump sum payment after retirement. |
|
Personal Observance Days |
Unused personal observance time will not be paid out. |
Unused personal observance time will not be paid out. |
Unused personal observance time will not be paid out. |
|
Longevity Pay |
Longevity pay is not paid out. |
Longevity pay is not paid out. |
Longevity pay is not paid out. |
|
Layoff Transition Adjustment Payment (LTAP) |
Michigan State University provides a LTAP to assist APA employees who have been laid off for at least 120 days and have terminated their employment and APSA employees who have been laid off |
N/A |
N/A |
|
Recall Rights |
Laid off employees have up to two years of layoff and bypass rights. If you are re-employed at MSU in a benefits eligible position during that time, your |
N/A |
N/A |
|
Unemployment |
Eligibility for unemployment insurance benefits is determined solely by the Unemployment Insurance Agency (UIA). Requirement information is available on the UIA website or 866-500-0017. |
Eligibility for unemployment insurance benefits is determined solely by the Unemployment Insurance Agency (UIA). Requirement information is available on the UIA website or 866-500-0017. |
Eligibility for unemployment insurance benefits is determined solely by the Unemployment Insurance Agency (UIA). Requirement information is available on the UIA website or 866-500-0017. |
|
Employee Assistance Program (EAP) |
The EAP is available for up to six visits per person for you and your benefit eligible dependents for up to six months after your date of separation. Visit the EAP website. |
The EAP is available for up to six visits per person for you and your benefit eligible dependents for up to six months after your date of separation. Visit the EAP website. |
The EAP is available for up to six visits per person for you and your benefit eligible dependents for up to six months after your date of separation. Visit the EAP website. |
|
Tuition Assistance |
If you are currently receiving tuition assistance, access is extended for up to six months after the layoff effective date. |
Review the Tuition Benefit Program webpage. |
Review the Tuition Benefit Program webpage. |
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Additional Comments |
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A vested employee can retire from layoff at any time, including after receiving the LTAP. |
Billing and Payments if Continuing Coverage
Once MSU's contribution towards your benefits ends, you will receive bills in the mail for those benefits that you are eligible to continue on a self-pay basis. Bills for to health, prescription, dental, optional life and AD&D insurance will come from Human Resources. You must pay these bills to continue coverage.
For any voluntary benefits, you will be billed directly from the voluntary benefits provider(s). You must pay these bills to continue coverage.
For bills from MSU during an unpaid leave of absence, you can stop the bills by:
- Contacting MSU Human Resources at 517-353-4434 or at SolutionsCenter@hr.msu.edu and ask to fill out a form directing us to cancel your coverages.
- You can write “Please cancel this coverage” with an effective date you want coverage cancelled on the bill and sign your name under the note and return the bill to MSU Human Resources.
failure to take action will result in your coverage being canceled retroactively for lack of payment. Do not use the services between the time MSU’s contribution to your coverage ended and when your coverage is retroactively canceled for lack of payment (usually this takes about 3 months).
If you do not pay the bills for your health care coverage and continue to use your insurance card for medical services at the point the coverage is retroactively canceled any payments made by MSU to your medical providers through your insurance will be taken back from your providers and they will then contact6 you directly for the cost of services.
For bills that come from voluntary benefit providers, contact them directly to cancel coverage.
COBRA is a law that allows you to continue medical related coverage, such as health, prescription and dental, at your own costs for 18 months after your employment ends with MSU (and up to 36 months under certain circumstances). When you become eligible for COBRA because your employment has ended, you and your dependents will be sent COBRA forms allowing you to choose to continue coverage and be billed for that coverage. You will have 60 days from the date of the COBRA notice or 60 days from the date the plan ends, whichever date is later, to return the forms. After that time period, you will no longer have rights to continue coverage through MSU.
While you are in a layoff-related unpaid leave of absence, you may continue health benefits at your own cost between the time you go on an unpaid leave and the time your employment ends. Once you transition out of unpaid leave and move to withdrawn status, you will then receive a COBRA notice to continue any coverage already in place at the time your employment ended. COBRA does not allow you to select different or new coverages. If your coverage lapsed during your unpaid leave, you will not be eligible to receive COBRA. The costs for COBRA are slightly more expensive than the costs of self-paying for your coverage during your unpaid leave because COBRA includes a 2 percent administrative fee in addition to the costs of coverage. Review COBRA coverage rates in the 2026 Open Enrollment Benefits Guide.
Most health insurance will only allow you to buy coverage during their designated Open Enrollment periods unless you have a qualifying life
event. Loss of coverage is a qualifying life event but most plans only allow you to enroll using loss of coverage as a qualifying life event if you apply for the new coverage within 30 days of losing your MSU plan coverage. They will require you to provide proof of the date your loss of MSU coverage occurred. You can contact MSU Human Resources at 517-353-4434 or at SolutionsCenter@hr.msu.edu to request a loss of coverage letter.
Possibly. At the point you go to unpaid leave, the change in your MSU income can be used as a qualifying life event to change your plan selections
provided you make that change within 30 days of moving from paid leave to unpaid leave.
For example, you could use this life event to change your enrollment from Community Blue to BCN or (where contractually allowed) the CDHP plan, to lower your costs. Or you could elect to change who is covered on your plan such as going from Family coverage to two-person coverage. You cannot, however, make changes when moving from inactive status to withdrawn status. At the point your employment ends and your eligibility for COBRA begins, you cannot make changes to your enrollments, you can only decide to continue the existing coverages under COBRA or not. If you want to make changes to what benefits plans you are enrolled in to lower costs, it is important that you do so within 30 days of moving from paid leave to unpaid leave and not after your leave ends and your COBRA election period begins.
