Layoff Survival Guide: Back to work! September 20, 2009

So, let’s say you’ve gotten a job offer.  Congratulations!  But now you may be wondering what to do about all those changes you had to deal with when you got laid off.  What do you do about your health insurance coverage now?  And how do you stop collecting unemployment?  What are all the things you have to deal with when you’re starting a new job?

A friend of mine asked me to write about this subject.  Well, one friend complained that my Layoff Survival Guide was too depressing, so my other friend (who is still looking for a new job) suggested this would be a happy twist to the posts.

So, with my first post, I talked about 401(k)s.  At your new job, you’ll likely be given the option to enroll in their 401(k) program (or similar program for non-profits, government jobs, and the like).  Sometimes you’ll have to wait to enroll, or wait for them to match or somehow contribute to your account.  I recommend signing up for a 401(k).  If they provide a matching contribution, I would strongly encourage you to sign up.  There are usually a few different options for funds you can invest in.  Don’t let that part intimidate you!  If you’re not sure, there’s often someone you can call at  the company running your 401(k) (or even in you HR department)  that can give you some general guidance.  And while I’m not a certified financial adviser, I would suggest you look into a “life cycle fund”, one that invests in funds that are more aggressive if you’re not retiring for many decades, and become more conservative as you get closer to retirement.  That’s what I’m doing with my IRAs.  For my 401(k), I’ve tried to make a diversified portfolio with assorted styles of funds, and only looking at the funds with low or no expense ratio.

Next I told you about COBRA and transitioning your healthcare coverage.  Now that you’re at a new job, you’ll likely have access to a discounted (or free) health insurance program (depending on what your company offers).  If the new insurance available is, in your opinion, better (cost-wise, or cover-wise, or other factors important to you) than what you’d been on while unemployed, you should sign up!  Confirm that your new health insurance is officially started, then get in touch with your former company’s HR person in charge of health insurance, and/or your previous insurance company, and let them know that you’re on a new plan.

Finally, I discussed collecting unemployment.  At least for me, in Massachusetts, I didn’t have to call to cancel.  I just stopped filing claims.  Hopefully, that’s what I was supposed to do!  I had asked a friend what she did when she got a new job, and she said she did the same thing.  It may differ from state to state, so check in with your state’s Office of Labor to confirm.

Hopefully this has given you a good idea of what you can look forward to once you get a new job.  As always, feel free to comment or email me if you have any questions.

Layoff Survival Guide: What’s this COBRA thing? June 26, 2009

Hopefully you found my last post in my newly minted Layoff Survival Guide useful.  And if not, here’s another chance for some helpful advice!

So, like I said last time, a really good friend of mine lost her job, and is now dealing with all the issues I had to deal with a little over a year ago.  So I figured I’d help her out, and maybe help others out along the way.  Behold, the power of blogging!

Her question for me was about COBRA.  What is it, what does she need to do, what are her options?

Let’s start with a simple definition.  COBRA stands for Consolidated Omnibus Budget Reconciliation Act.  Yeah, that doesn’t mean a lot to me either.   But when you’re handed a severance package with all sorts of information, one thing you’re told about is COBRA (and if you didn’t get any info for COBRA, I recommend you contact your former employer to find out what’s up).

Basically, COBRA entitles you to continue your health coverage that you received through your employer.  Except you will be paying the premium (rather than your former employer).  However, recent legislation from The American Recovery And Reinvestment Act allows for assistance in your insurance premiums through COBRA.  As stated on this Department of Labor page:

“Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009 due to an involuntary termination of employment that occurred during that period.”

There also is an income threshold that you need to be under in order to fully benefit for this program.  For more information, you can check out their Fact Sheet for COBRA Premium Reduction here.

If you don’t elect to continue your insurance from your previous job through COBRA, you still have options.  A friend forwarded me a link to a site that helps you pick out insurance options (in Massachusetts).  And the DOL has another good page telling you about how to attain health insurance.  You can search for a private insurance plan, or may be eligible for a government plan such as medicare.  Also, if you have a spouse with health insurance, you can get on his/her plan.  I’m not an expert on the different types of insurance, so you might have to do some searching on your own.  Also, there are apparently some tax implications with some health insurance premiums, that I’ll let you check out on your own (mostly because I’m not as familiar with these tax rules).

What did I do?  Well, luckily, my severance package included a month of health insurance coverage, so I was able to depend on that while figuring everything else out.  I ended up paying the hefty premiums for COBRA coverage, continuing the coverage I enjoyed while at my old job.  It may not have been the best decision, financially, but it was the “easy” thing to do.  I found it difficult to sort through all my alternative options for health insurance.

Why is it important to have continued health coverage?  There are a few reasons.  As I learned firsthand a month into unemployment, you never know when you might need insurance.  My boyfriend hurt himself mountain biking, and I drove him to the hospital.  Since he had health insurance, he wasn’t stuck with an enormous hospital bill.  Saving money by not paying for health insurance could end up losing you money if you end up requiring an expensive medical procedure.  Or you may have to decide if a procedure is financially worth it, even if it’s medically important.

Another reason you don’t want your insurance to lapse is because it might make it more difficult to prove that any condition you have down the road isn’t a preexisting condition.  I know that’s more of a worry/fear than an actual fact, so take that with a grain of salt.

So what do you need to do?  Decide whether or not you’re going to continue your insurance plan through COBRA (talk to your former employer/fill out the forms they gave you).

So, like I’ve said before, I’m not a legal expert or anything, so this is merely friendly advice.  But if you see any errors or omissions here, or have specific questions, let me know in the comments or via email.  And if you have other layoff-related questions, you can ping me with those as well!

I got laid off…now what? May 6, 2008

Yep, you read it here first folks. I got laid off. Thank that beautiful economy of ours, I guess. But now that I’m unemployed, what do I do?

Be thankful for the emergency fund

Remember that emergency fund that every personal finance guru, blogger, author, etc. tells you about? You’ll be very relieved when you find out you have that nice cushion to fall back on. And really, that whole “pay yourself first” idea really works. I never noticed the money was gone (every month I had an automatic transfer over to my ING account), and now that I need it, it’s sitting there waiting for me to draw from when I need to.

Take care of the transitions

Depending on what your severance package provides (or if you didn’t get one at all), you’ll probably look at a few things. Did you get any severance pay? Congratulations. Stash that into your bank account ASAP, and be thankful that your company was nice enough to help you out there. My company did provide some severance pay, but a friend of mine got laid off recently and got pretty much next to nothing. It’s really dependent on your company.

What are you going to do about insurance? Again, some of this depends on your company; they may immediately stop paying the premiums for your insurance, or provide you a grace period. Either way, you should learn about the COBRA. This is where you are given the opportunitiy to continue your insurance plan, but you must pay the premiums, at up to 102% of the cost. Many people can just find alternate, often cheaper plans that still cover their needs. Depending on your state, you might be required to have insurance (which is the case in Massachusetts). From what I’ve heard, if you don’t elect to continue through COBRA, but then something happens and you need insurance, you can retroactively get it taken care of. Don’t quote me on that, I’m looking into it.

Were you enrolled in a 401(k) or similar program? If so, you have a few options that I know of. They are summarized rather nicely in Get Rich Slowly’s page. I am most likely going to either roll my 401(k) over into an IRA, or, if I find new work soon enough and it’s a feasibility, I will move my 401(k) to my new company’s 401(k). What I will NOT do, and I don’t recommend you do it either, is cash out my 401(k). You have to pay a penalty, and taxes right then for your money, and now you are back to square one with your retirement planning.

And if you had an FSA account (I did), you’re probably going to have to just submit the rest of your claims ASAP, and lose any money that you didn’t spend. I guess this wasn’t something I considered when I initially signed up, but I guess that’s something to think about…how quickly you’ll spend the money in your account. I’m not sure what happens if you spent more than you accumulated, if you have to pay back the extra. I’ll have to check on that as well (for you guys, not for me).

Looking ahead

It’s rough, but it’s time to get back out there! Let your friends know that you are looking. I went ahead and listed it on my facebook profile…which worked out nicely, because a friend saw that and offered to talk to someone in his company that works in my desired area of research. Having good friends willing to help you out is definitely a plus. This is not the time to start networking with people you’ve casually met in the past…hopefully you’ve been networking all along…of course, if you haven’t, you might as well start now! It just looks a little fishy when you suddenly talk to someone you sort of know who can help you find a job. But don’t be afraid to. Update your profiles on your social/business networking sites, and confirm that the available information and connections is accurate and represents you in a positive light. My next step is to look at companies that interest me, and then determine if I have a personal connection to that company, either through friends or through my alumni network.

In the meantime, I’ve also started looking at the assorted job posting sites out there, like monster.com and career builder. There are plenty of others that I’m looking at, and if you want, I can post those, too, though I’m not sure how popular of a site they all are.

Well, hopefully you aren’t all in the same boat as me. Let me know what you’ve found helpful, or if you’re looking for information that I didn’t include, since I probably just omitted it for no useful reason.

[Edit: I forgot to mention applying for unemployment. There’s a good overview here, and for Massachusetts, you can find out how to file claims and such here. If you have trouble navigating that site, let me know. I managed to figure it out.]