Tag: severance

Question: Must medical coverage continue if we pay severance on a weekly basis for several weeks after the employee has terminated employment? Answer: When an employee is terminated or resigns, benefits end as stated in your summary plan description (SPD), so check your SPD first. This is typically described in most plans as either the…

Question: If we are issuing severance pay to an employee, does it have to be taxed? Answer: Severance pay is considered a taxable compensation and should be run through payroll. If there is a desire to avoid tax implications for the employee, the employer may ‘gross up’ the wages to cover the tax deductions from…