3 steps to take after losing your job
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The labor market is still strong, but layoffs are picking up.
This year Peloton, Netflix, Shopify, Lyft, and, most recently, Twitter, all announced significant staff reductions. Meanwhile, executive outplacement firm Challenger, Gray & Christmas reported this week that job-cut announcements were up 48% year-over-year in October, with more layoffs on the horizon.
Getting terminated can be traumatic, setting off a myriad of financial problems.
By taking certain steps, sooner rather than later, you can reduce the disruption and boost your odds of a positive next chapter, experts say.
1. File to collect unemployment benefits ASAP
You should file for unemployment benefits as soon as possible after a layoff, said Andrew Stettner, the director of workforce policy and senior fellow at The Century Foundation.
Even if you received unemployment benefits earlier in the pandemic and are facing joblessness again, you may qualify for more aid.
The rules vary state by state, but generally, so long as you’ve worked at least 15 weeks since last receiving unemployment benefits, you’re eligible to open a new claim for a partial payment, Stettner said. Most people will need to have been working for at least six months to qualify for a full benefit again.
If you’ve been employed for more than a year, your benefit should come fairly quickly.
2. Weigh health insurance options
Job losses can also often mean losing your health insurance.
“As overwhelming as it may be, it’s important to look for coverage quickly” after a layoff, said Caitlin Donovan, a spokesperson for the National Patient Advocate Foundation, a nonprofit that helps individuals access and pay for health care.
Your first step should be to speak with someone in your company’s human resources department to understand when your coverage technically ends.
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“There’s no blanket rule here: For some, coverage may end immediately; for others, it may go until the end of the month,” Donovan said. “Either way, you should immediately start planning to transition to a new plan.”
Navigating the health insurance landscape on your own can be stressful and confusing.
There are resources you can turn to for help. If you have a diagnosed condition, including cancer, lupus or diabetes, you may be able to get support deciding on and enrolling in a plan with the National Patient Advocate Foundation, Donovan said. You can also consult with a local health-care “navigator.”
Generally, newly laid off and uninsured people will have three routes to coverage from which to pick: COBRA, the Affordable Care Act subsidized marketplace or a public plan such as Medicaid or Medicare.
COBRA gives those who have left a company the option of staying on their former employer’s insurance plan, although it’s typically very expensive. That’s because people have to keep paying the part of their premium they’d been responsible for while working, as well as the remainder, which their former employer had covered.
Medicaid typically involves no or low monthly premiums, and marketplace plans are the cheapest they’ve ever been for many people, thanks to relief legislation passed in the pandemic.
3. Protect your retirement savings
Many people save for their retirement through their job. If you had access to a 401(k) plan at the company from which you were laid off, you’ll need to decide what to do with that account.
You may not want to do anything, said Rita Assaf, vice president of retirement leadership at Fidelity.
Most employers allow you to keep your plan with them after you leave, Assaf said. (However, if you have less than $5,000 in the account, the money may be sent to an individual retirement account for you, she added.)
However, you won’t be able to continue contributing to a plan at a company you’re no longer working for. And you may be limited in how much you can take as a loan or withdraw from the account.
Make sure to research fees and expenses when choosing an IRA provider.
vice president of retirement leadership at Fidelity
Another option is to roll over the account into an IRA, which can be opened at a bank or brokerage firm. This would allow you to continue saving. You may also be able to withdraw money from this account if you’re under 59½ without any penalties, Assaf said, if you use it for a first-time home purchase or higher-education expenses.
“Make sure to research fees and expenses when choosing an IRA provider, if you do, though, as they can really vary,” Assaf said.
If you’re hopping to another job right away, you may have the option to roll your old 401(k) plan into one with your new employer. Having just one savings retirement account may feel more manageable.
“It’s important to note that not all employers will accept a rollover from a previous employer’s plan, so you should check with your new employer before making any decisions,” Assaf said.
What you don’t want to do, if at all possible, is to cash out the account, she said. You’ll likely be dinged with taxes and penalties, not to mention risking your financial security when you leave work for good.