Job Loss: The First 30 Days

The story: One thing at a time

Lee sits at the kitchen table with a layoff letter while Nora helps turn it into a short, calm list of first steps.

1. Narrator: Lee was laid off this morning. The letter offers severance and mentions health coverage.
2. Lee: There’s so much here. Where do I even start?
3. Nora: One thing at a time. First, income. You can file for unemployment today.
4. Narrator: Unemployment claims usually can’t be backdated. Benefits are taxable, so Lee can ask to have tax withheld.
5. Narrator: Next, health coverage: keeping the work plan through COBRA, a Marketplace plan or a partner’s plan. Each has a deadline.
6. Nora: And don’t cash out your 401(k). That money is for later.
7. Narrator: File, cover, don’t cash out, call. Lee writes the list down, and it already feels smaller.

What you’ll learn

1. Income first

   File for unemployment right away, since claims usually can’t be backdated. Benefits count as taxable income, and no tax is withheld unless you ask, using Form W-4V. In some states, severance pay can delay benefits. Your state’s rules are on the fact card.

2. Read the severance terms

   Severance often comes with a release agreement, where you give up the right to sue. Read it before you sign. If you’re 40 or older, federal law gives you time to review it and a few days to change your mind after signing (see the card).

3. Choose health coverage

   You can keep your work plan through COBRA, usually at the full price, or buy a Marketplace plan during a special enrollment window. A partner’s plan may also add you after a job loss. Compare the costs and watch each deadline.

4. Protect your retirement savings

   Cashing out a 401(k) can cost taxes and often a penalty. Leaving it or rolling it to an IRA keeps it growing. If you had a 401(k) loan, it usually comes due; you have until your tax-filing deadline to put that amount into an IRA.

Key words

unemployment insurance

weekly payments from your state while you look for work after a job loss

severance

pay an employer may offer when a job ends

COBRA

a way to keep your work health plan after you leave, usually at full price

release agreement

a paper where you give up the right to sue, often in exchange for severance

Common questions

What do I say when I call a lender?

Explain that you lost your job and ask about hardship programs. Calling before a missed payment usually opens more options.

How should I handle the job search?

Many people treat it like a job, with set hours each day. Breaks matter too. A hard stretch is easier with a routine.

Remember this

File, cover, don’t cash out, call.

Try it: Test a one-income month

1. Write down your household’s monthly income with one paycheck removed.
2. Compare it with your bare-bones budget.
3. Look up roughly what unemployment would pay on your state’s site.

No account needed: write today’s income and the one-income number side by side on paper, or try it in the demo.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Your state’s unemployment rules and how to file

  Source: USA.gov(opens in a new tab)

• Form W-4V: tax withholding on unemployment

  Source: IRS.gov(opens in a new tab)

• Severance releases for workers 40 and older

  Source: EEOC.gov(opens in a new tab)

• COBRA: how long it lasts and when to choose

  Source: DOL.gov(opens in a new tab)

• Special enrollment after losing coverage

  Source: HealthCare.gov(opens in a new tab)

• 401(k) loans when you leave a job

  Source: IRS.gov(opens in a new tab)