Lost your job? Here are some financial tips.
Have you recently lost your job? This can be a difficult time with potentially significant financial implications. Even before you think about getting a new job or what’s next for your working career, you may need to immediately address some of the considerations below. Here are a few places to start.
Health Insurance
Many employees get health insurance through their employers. Losing a job is typically a “qualifying life event”, so you may have an opportunity (typically 30 days from the qualifying event) to get on your spouse’s health plan; enroll in a new plan through healthcare.gov; or continue on with your current insurance through COBRA. COBRA gives workers and their families the right to choose to continue their current coverage by paying the whole premium cost for a period of time.
Employer 401k or Retirement Savings Plan
Did you participate in your employer’s retirement savings plan through work? If so, you will need to decide how to handle the funds you contributed to the account. You may also be eligible to receive a portion of your employer contributions, meaning, funds that the employer contributed to your 401k on your behalf. Read more about choices you have regarding your old employer’s 401k here.
Other Employer Benefits
Your employer may have offered other benefits. Now that you are no longer employed by them, you will need to evaluate what to do about these benefits. Here is a snapshot of some typical employer-sponsored benefits.
Life Insurance. Many employers offer group term life insurance coverage to employees, sometimes paying premiums for coverage of 1x or 2x your salary. Their payment of this premium typically ends with employment, but you may receive correspondence from the life insurance provider offering a continuation of benefits if you pay the premium yourself. Carefully evaluate the costs and whether you need this coverage before purchasing it, and talk to your professional adviser about your situation.
FSAs (Flexible Spending Account). If you have qualifying dependent care or healthcare expenses, you can typically still turn in receipts to receive reimbursement even after employment. Talk to your old employer’s HR or the FSA provider to learn more about requirements. But don’t forget about this money because you can’t get it back if you don’t use it.
HSAs (Health Savings Account). These can be used as reimbursement for qualifying healthcare expenses, or they can be saved and invested for future healthcare needs. Unlike an FSA, an HSA does not need to be used in the current year. Reach out to your HSA provider to learn about fees and investment options available for your account now that you are no longer employed.
Filing for Unemployment
Depending on the circumstances of your loss of employment, you may qualify to receive government unemployment benefits. Unemployment benefits may be about half your former salary (up to a cap), depending on your state, and taxes are typically owed on these benefits. Reach out to your state’s unemployment office to learn more about how to apply. Note that there can be a several-week delay in receiving benefits from the time you apply, so don’t delay in applying. Here are some tips from the state of Illinois regarding filing for unemployment, along with the IL claim filing link.
Personal Budgeting
Hopefully you have built up a rainy day fund to cover your essential spending for a couple months. Even so, now is a good time to tighten your spending habits at home. Without a paycheck, carefully examine your latest credit card and bank statements to see where you may be able to cut expenses. An easy place to start can be subscriptions or other ongoing expenses you can do without (think streaming video or music, news service subscriptions, or cable television add-ons). Here is more information on budgeting.
It’s not easy to lose a job.
Your day to day schedule may be changed. Your finances may be affected. Who you spend time with each day may be different. But one thing is not different, and that is your intrinsic value as a person. You can get through this. And a little planning can help.