What is a severance package?

Severance pay. The Department of Labor says it is often granted when a job ends, and it is usually based on how long you worked for the employer.

Help with health coverage. Some employers pay part or all of the cost of health coverage, including COBRA, as part of a severance agreement. The Department of Labor says they are not required to.

Outplacement services, such as training in résumé writing and interview techniques. The IRS describes packages where you take less severance pay to receive these services.

The Fair Labor Standards Act, the federal wage law, does not require severance pay. Severance is a matter of agreement between an employer and an employee, or the employee's representative.

If severance was due to you under your employer's plan and you did not get it, the Employee Benefits Security Administration (EBSA) at the Department of Labor may be able to help.

Because severance is set by agreement, the terms that apply to you are in your own papers: the severance agreement or offer your employer gives you, and your employer's plan if the severance comes from one.

For your health and retirement benefits, the Summary Plan Description explains what your benefits are. Your plan administrator can give you a copy.

If your package pays toward health coverage, ask the plan administrator how that affects your COBRA coverage and your right to enroll in a Marketplace plan.

The IRS says you must include severance pay in your income, and any payment for the cancellation of your employment contract too. Severance payments are subject to social security and Medicare taxes and to income tax withholding.

If you accept less severance pay so that you can receive outplacement services, you must still include the full, unreduced amount of the severance pay in your income.

The federal WARN Act requires some employers to give notice before a plant closing or mass layoff. The Department of Labor says the Act helps ensure advance notice of qualified plant closings and mass layoffs.

NewsIntel reads the WARN lists that state labor agencies publish and links every notice to the list it came from. Look for your employer there.