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Layoffs are happening all over the economy right now. If you are considering layoffs or wondering what other businesses are thinking about, let’s look at how health insurance fits into the process.

Cost savings

If you are reaching the point of considering lay offs employees, then cost savings has jumped to the top of the priority list. Layoffs can undoubtedly help a company save money on health insurance premiums and other benefits. This is because health insurance is a major expense for most companies, and the cost of providing coverage for each employee can add up quickly. By reducing the number of employees, a company can reduce the amount of money it spends on insurance and benefits.

However, it’s important to note that laying off employees can also have other costs, such as severance pay and unemployment benefits. These costs will offset some of the savings from reduced health insurance premiums in the short term.


There are a number of federal and state laws regarding layoffs and health insurance coverage that employers must comply with. We can’t get into all of the legal compliance ramifications, but the Consolidated Omnibus Budget Reconciliation Act (COBRA), for example, requires employers to offer continued health insurance coverage to laid-off employees; however, the employee is responsible for paying the full premium. The Affordable Care Act (ACA) also includes layoffs and health insurance coverage provisions that must be considered.

Failing to comply with these laws can result in fines and other penalties, so it’s important for you to understand your legal obligations when it comes to health insurance and layoffs.

Employee morale

There are a number of studies and articles detailing that layoffs can harm employee morale, which can affect productivity and overall business performance. Even the employees who are NOT laid off may feel anxious or stressed about losing their job and their health insurance coverage. This can lead to decreased job satisfaction, decreased productivity, and increased turnover.
To minimize the impact of layoffs on employee morale, employers can provide clear communication and support to affected employees. This can include providing information on COBRA coverage or other health insurance options, offering outplacement services, and providing emotional support to employees during a difficult time.

How We Can Help

Before you get to the point of genuinely considering layoffs, give us a call and find out how we can drastically reduce your health insurance costs while still providing top-tier health care.

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