Depending on which field you work in, the prospect of getting laid off may be looming large. Industries like tech and media have already cut thousands of jobs this year.

Losing a job is traumatic. It’s often very sudden, and can leave people feeling stunned and maybe even a bit panicked about whether they’ll be able to pay their bills.

Some people are told to leave their roles immediately; others are given notice. Either way, it’s normal to feel unprepared and stressed — and not know what to do next.

If you or someone you know gets laid off or fired, don’t let the shock keep you from making informed decisions. You’ll have important questions, and those questions deserve a thoughtful response. Store this info away (or bookmark the article) so that you’ll know what to do if the time comes.

Answers to Your Day-One Questions

How do I stay insured?

The insurance coverage you have through your employer may end on your last day of employment, or last through the end of the week or month. To stay insured, you’ll need to decide whether to sign up for COBRA coverage through your employer or get a new policy elsewhere.

COBRA, if it’s made available, allows you to keep your employer-based insurance plan, though it’s often more expensive than other options. Your monthly premiums can be double what you’re used to because you’ll probably be required to pay your employer’s share of the cost too, plus an administrative fee.

If you choose to get new coverage, you can either buy coverage on a government exchange (your state may have its own or use the Health Insurance Marketplace,) or, if you have a spouse with health insurance, get on their plan. (Losing your job makes you eligible to enroll in their plan — even if it’s not their employer’s normal open enrollment period.)

Marketplace plans (also called “Obamacare,” “ACA” or “exchange plans”) are sold online or via insurance agents, and in a range of options and premiums. Unlike COBRA, your household income may qualify you for discounted premiums known as premium tax credits.

When comparing your options, consider not only premiums, but your out-of-pocket costs as well as the breadth of coverage and doctors. Marketplace plans may not be as generous as your employer’s group plan, and could have fewer in-network doctors. And if you do decide to get a new plan, don’t forget that whatever you’ve previously spent toward this year’s deductible won’t apply. These amounts reset with a new plan.

You’ll also want to consider coverage gaps. You’ll get 60 days to decide on COBRA, and once you do, your coverage will be retroactive to your first day without your employer plan. With a marketplace plan, however, your coverage won’t start until the first day of the month after your employer plan ends.

What happens to the money in my HSA and FSA?

If you had a Health Savings Account (HSA) with your employer, the money in it is yours. You can keep your funds right where they are and use them when needed. Or, you can move the money to a new employer or consolidate them with any other HSA account you may have.

If you have a Flexible Spending Account (FSA), on the other hand, you can’t take any remaining funds with you. So if there’s time before your last day, use that money! Here’s a list of eligible expenses.

Are there other benefits I can take with me?

Not that often. Some life insurance or long-term care insurance plans are portable or convertible to individual plans, although the monthly premiums may be higher. Ask whether there’s any option to take these policies with you.

What happens to my 401(k)?

The money in your 401(k) or 403(b) is yours, unless you have employer contributions that haven’t vested yet. You can’t keep that portion.

As for what to do with your account, there are usually four main options (fewer if you have a smaller balance):

•  Keep the account and continue to oversee your investments as you did before. You just can’t contribute anymore.

•  Roll the funds into a new 401(k) or 403(b) plan if/when you get a new job that has one.

•  Open an IRA and roll the funds over. (If you’re rolling over into a Roth IRA, it could impact your taxes.)

•  Withdraw some or all of the funds, paying a 10% penalty (unless you are 55 or older) and income tax on the money. This is obviously not desirable, but it is an option if you need money.

Note: There can be penalties if you don’t roll the funds over directly into the new plan.

What’s owed to me?

While you won’t necessarily be entitled to compensation for unused vacation time, you should ask your HR department about it, rather than assuming they’ll tell you. And check that your final checks account for any bonuses or commissions owed to you.

Note: You’ll want to gather your final paystubs, any separation documents, and the contact details for the company’s HR and benefits coordinators before losing access to your employee platform. You will likely need them for unemployment claims or to qualify for new health insurance.

Will I get severance?

That’s up to your company. If there is severance, you might be able to negotiate certain details of your package.

Answers to Your Day-Two Questions

Can I file for unemployment?

If your layoff is a normal layoff (because of something out of your control,) you should qualify for unemployment insurance benefits. But you probably won’t qualify if you were let go due to performance issues or behavior.

(If your boss used a vague euphemism when delivering the bad news, ask your HR department to share documentation so you can determine where you stand.)

Either way, contact your state’s unemployment program ASAP to learn your state’s rules and hopefully get the ball rolling.

What are my options if I don’t have enough saved to pay my bills?

People don’t always realize that many government programs offer financial aid based on income, not assets. So even if you own your home or have a retirement account, check to see if you qualify for SNAP, rental assistance, or other aid — especially if you’ve been the only breadwinner in your household. It can help you keep the fridge full and lights on.

As soon as possible, take stock of your savings to determine how many months you could go without your paycheck. If your cushion is low, the first step is to omit any unnecessary extras in your living expenses. (Though you may want to preserve small, meaningful items if they improve your quality of life. In other words, goodbye happy-hour snacks and cocktails, hello coffee for the job hunt.)

And if you estimate a serious shortfall, consider contacting the lenders on your mortgage payment, credit cards, and other accounts. Late payments can significantly damage your credit score, but lenders will often offer some leeway if you ask for it.


Image: Bernie Pesko/SoFi

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