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Employment status is "LOA, NO PAY, NO BENEFITS". SSD recipient. status not allowing to get 401k money.

Lafayette, IN |

Approved LOA/FMLA in April 2013. Employer STD benefits stopped July 2013. September 2013 approved for Social Security Disability Benefits. No pay from employer since July2013. Received notice in January 2014 that medical benefits stopped effective 12/2013. Employer has not separated me from company thereby preventing me from accessing my 401k money. I need this money to purchase medical insurance now. What can I do???

Attorney Answers 3

Posted

First, I hope you have contacted a health benefits navigator to make sure it's true that you "need this money to purchase medical insurance." Under the Affordable Care Act, with SSDI-level income, you should be able to get a subsidy to make health insurance costs more manageable, if you don't qualify for Medicaid.

The recent notice that your medical benefits stopped effective December 2013 -- does it say why? Usually a COBRA notice would be proof that your employment has terminated.

An employer shouldn't be able to hold your 401(k) money hostage once it's clear that you are no longer working, and normally there would be no financial incentive for an employer to do so. But if you can't solve this problem by yourself, you will need to consult an employment or contract lawyer to help you.

Disclaimer: This site exists to provide information only. It is not legal advice. Answering your question does not create an attorney-client relationship. I am a Massachusetts lawyer. Any information provided on this site does not, except as explicitly stated, imply familiarity with laws or procedures peculiar to your state which may differ from those where I practice.

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Asker

Posted

Thank you for your reply. I did receive COBRA paperwork and therefore thought that I was terminated. However, my status remains LOA NO PAY NO BENEFITS. The letter says "As a result of your employment status change, your benefit coverage was canceled as detailed below" then a chart that shows all my medical benefits coverage ended 12/9/2013. This is the letter dated 1/6/2014. No "status change" was described. However according to the HR FOR ME line and according to Fidelity, my status is not listed as terminated or separated from the company. I am not yet eligible for Medicaid due to the fact that the 401k account is considered an asset and because of the balance I am over the financial guidelines to qualify. Because of the employment status, I cannot get my 401k money out except on a loan basis of which I could not repay the monthly amount that would be due. I need the money because financially I cannot pay for medical coverage without the money in my 401k. The SSDI pay is not even 1/3 of my employment wages. I have CHF and need a transplant and have many medicines and medical bills to pay. I am 50 years old and do not qualify for Medicare. I will get Medicaid after I have received SSDI benefits for 2 years. What is a health benefits navigator? Is this someone through my employer or a local or state agency? I cannot afford to pay a lawyer, however, I sure wish I could. Thank you again.

Deborah Gwen Roher

Deborah Gwen Roher

Posted

If you have a large asset like a 401(k) that you are hoping to get access to, that is how you can pay a lawyer. It seems to me under the circumstances that you can't afford NOT to hire a lawyer. I am not exactly sure who employs the health benefits navigators, but these are people whose job is to do outreach to make sure people find out what they are entitled to and help them choose the best option under the Affordable Care Act ("Obamacare"). Some states with Republican governors are trying to impede these navigators from doing their jobs. You may need to dig around to learn who is performing this function in your area.

Posted

Contact the HR department and ask them to update your status with Fidelity on the 401k from LOA to Terminated. Fidelity cannot update their information until the employer feeds the status change to them. When you ask HR to update the status, ask them when they will update the information. For many employers they can update the status with Fidelity immediately. Some companies only do it by weekly feed. If the status does not update at Fidelity within a few days after HR said they would make the change then call Fidelity and ask them to contact the employer to get the status change. If the phone rep says he or she cannot do it then ask for a supervisor. It can be done, it just isn't always supposed to be done from Fidelity's end.

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Posted

Submit your resignation and request that the employer change your status to terminated. You will likely be eligible for COBRA coverage and a distribution from your 401(k) Plan once your status has been changed. Keep in mind that coverage through the exchanges will likely be more affordable than COBRA coverage because you should qualify for a subsidy. Go to www.healthcare.gov to enroll in exchange based coverage.

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