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Insurance Billing for Recently Terminated Employees

Terminated employees remain on the company's insurance invoices until the carrier processes the termination and cancelation of the coverage. Since carriers generate insurance invoices in advance, it's common for terminated employees to show up on a company's insurance invoice after their actual termination date if the carrier did not process the termination prior to generating the invoice. Once the carrier processes the cancelation, it will automatically credit the payment on a future invoice (1-2 billing cycles).

For example, assume that a particular carrier's cancelation policy is end-of-month after termination date:

  1. An employee is terminated on the 3rd of the March. Their coverage ends on March 31st.
  2. The carrier bills a month in advance. It generates April's invoice (for coverage in April) on the 15th of March but doesn't process the termination until after the invoice is generated.
  3. The employee will show up on April's invoice, even though their coverage ended in March. The invoice should still be paid in full to avoid coverage interruption for non-payment.
  4. When the carrier generates May's invoice, the invoice will include a credit for the amount paid on April's invoice for that employee.
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