What to Do If I’m Laid Off
As temporary furloughs become permanent layoffs during the coronavirus epidemic, millions of people are left wondering how they are going to make ends meet. As of May 2020, there have been over 30 million initial unemployment claims in the United States. The question hovering above many people’s minds is what to do if they’re laid off.
The number of lost jobs is drastically rising. Approximately 20 million people are expected to be furloughed or laid off by July. If you have lost your job from the coronavirus, it is important to remain calm and focus on developing a strategy. High stress is a natural response after being laid off. Strategizing is a good way to work through your emotions, manage anxiety, and avoid falling into financial ruin. Here is our quick list of things to do if you’re laid off:
Steps to Take if You’re Laid Off
Obtain Documentation from HR
The shock of being laid off can leave anyone in a stupor, even if they saw it coming. Make sure you reach out to your former company’s human resources department and ask them to explain your severance package and potential next steps.
Request a letter clearly explaining the reasons you have been laid off. This information can be provided to future employers. The letter should detail the external circumstances that ultimately led to your position being eliminated and make it clear the layoff had nothing to do with your conduct or performance.
Also, ask for a letter of recommendation. While these are not always required from employers, having them available can facilitate your job hunt and strengthen your future applications.
Check Your Health Insurance
Unemployment health insurance coverage is difficult to navigate. Speak with human resources about your coverage options and how long your current policy will remain in effect. Your severance package should include details regarding the status of your health insurance and options going forward.
For those who were laid off from a company that had at least 20 employees within the last year, you can apply for COBRA health insurance. The Consolidated Omnibus Budget Reconciliation Act can keep your health insurance plan active for up to 18 months, but there is a nasty catch. You must pay off the entire policy’s premium in full up to 102 percent of the plan’s total cost.
Because of this stipulation, many people are unable to afford COBRA. Thankfully, because losing your job is considered a qualifying life event under the Affordable Care Act, you are now eligible to purchase health insurance outside of the annual open enrollment period. This means you can log onto healthcare.gov and explore your options through your state’s marketplace, or you can buy a plan through the federal exchange.
Review Your 401k and Retirement Fund
If you have at least $5,000 in savings, your 401k can stay in your former company’s plan and possibly consolidate it with your new employer’s plan in the future. However, it is often recommended to open a rollover IRA account and invest your old 401k funds there. Doing so often provides more control over fees and charges.
Although it is not ideal, desperate times call for desperate measures. You may have to cash out your 401k to make ends meet and stay financially secure until you find a new job. This should only be employed as a last resort. Cashing out your retirement plan will significantly damage your retirement fund after paying a hefty 10 percent penalty and taxes for withdrawing early.
Accept the Loss
It is normal to experience grief after losing your job. With so much fear, uncertainty, and possibly even guilt tied to this experience, make sure you give yourself the headspace to cope with how you are feeling. Rather than trying to repress and push forward, accept your sadness, and let yourself hurt.
To direct your pain into something productive, sit down and write about the time you spent in the position. What did you learn? How did you grow? What and who will you miss, and how did the experience shape you as a professional?
Although being laid off is an incredibly difficult experience, you have the power to push forward and begin making positive changes within your control. Focus on your job hunt, invest free time into meaningful experiences, and keep your mind focused on the present while planning for the future.
Manage Your Debt if You’re Laid Off
Defaulting on loans or skipping payments can make your financial situation even worse it seems now. You may be tempted to stockpile money, but you should keep making routine payments as long as you are able to do so. Paying credit cards and other debts may be the last answer to your question of what to do if I’m laid off.
The first step is to contact your creditors and ask if it is possible to lower your minimum payments. This can help you stay current while also keeping more money in your bank. Be mindful your balance will continue accumulating interest. Prioritize your budget and eliminate any unnecessary expenses such as cleaning services or subscriptions.
But if you are having difficulty meeting your debt obligations, it may be prudent to speak with an accredited financial expert. Financial professionals at UmbrellaDEBT Relief can assist you in determining the best path in managing your debt. Contact us today to learn more about your options.