While there are many reasons you might find yourself unemployed, the primary reason more individuals are out of work right now is due to COVID-19 layoffs. As COVID-19 has swept the nation, it has left many wondering what to do now.
Whether you’ve been laid off because of coronavirus or other circumstances, your main focus should be applying for unemployment benefits and finding your footing in this time of uncertainty. To help you make this adjustment as smooth as possible, this post will cover the basic steps of what to do when you’re unemployed.
Unemployment & Coronavirus
While it’s believed that the virus will hit its peak in mid-April, it seems that for now, many individuals are still facing the risk of being laid off. As of early April 2020, the Federal Reserve Bank of St. Louis had forecasted that 47 million Americans could lose their jobs because of coronavirus.
But that doesn’t necessarily mean it’s time to panic. Of course, the thought of losing your job is scary and can have a serious impact on your lifestyle, but there are some resources in place that you can take advantage of.
So, what can you do to protect your livelihood? Let’s dive into the basics of what you need to know about unemployment benefits, then we’ll walk you through what to do when you’re unemployed.
The Basics of Unemployment
Before you can take action, you need to understand the different aspects of unemployment and how they’ll apply to you:
What Is Unemployment Insurance?
Unemployment insurance, commonly referred to as unemployment benefits or simply unemployment, is a program designed for individuals who have lost their jobs. This program provides payments to help sustain Americans who have lost their jobs.
However, not everyone is entitled to unemployment insurance. For example, you typically cannot claim unemployment benefits if you quit your job. That said, there has been a significant expansion of unemployment benefits, including who can qualify and for how much, due to the coronavirus.
In late March, the government passed the CARES Act into law. As part of the 2 trillion dollars of economic relief provided by the CARES Act, there are three main additions that you need to know about:
- Pandemic Unemployment Compensation (PUC): The federal government is granting an additional $600 per week for unemployment insurance recipients. This will run through July 31st, 2020.
- Pandemic Unemployment Assistance (PUA): Available to individuals who would not typically qualify for unemployment benefits but have lost their job directly due to COVID-19.
- Pandemic Emergency Unemployment Assistance (PEUA): A 13-week continuation of your state unemployment benefits after the initial period.
Am I Eligible for Unemployment Benefits?
Before coronavirus-related layoffs began, there were quite a few restrictions as to who could qualify for unemployment and who could not. Fortunately, the CARES Act has expanded upon who can qualify for these benefits. You may qualify for unemployment if:
- You are unable to work because of coronavirus
- Your hours have been substantially reduced due to coronavirus
- You had to quit your job because of coronavirus
- You can’t work because you are a caregiver (for example, your children’s school closed down)
- Your job you were supposed to start fell through because of coronavirus
Typically, you’re ineligible for unemployment benefits if you quit your job—unless it was for a reason that is deemed acceptable (such as leaving to care for an ill family member).
With the expanded benefits, more types of workers, including self-employed individuals, independent contractors, and gig workers can also qualify. So, if your freelance work has come to a halt as clients reevaluate their budgets, you may not be out of luck after all.
How Much Will I Receive in Unemployment Benefits?
The amount of money you are able to receive from unemployment primarily depends on your state’s pre-determined benefit amount and your previous income. These numbers are typically what is used to calculate a weekly unemployment payment.
However, in addition to the amount you’d traditionally receive from the state, you’ll also be able to get the additional $600 per week in PUC.
How Long Do Unemployment Benefits Last?
Usually, state unemployment benefits are only available for up to 26 weeks, be sure to check your state’s rules. With the changes made in response to coronavirus, you can receive unemployment benefits for up to 39 weeks.
What Happens to My Health Care?
If you’re laid off, you may lose your health insurance benefits that were available to you through your job. However, there are health insurance options available for those who have become unemployed. You may be able to keep your health insurance through COBRA.
Otherwise, see if you prefer to elect coverage through the HealthCare Marketplace. Losing a job is considered a qualifying life event, and thus you can enroll during a Special Enrollment Period. If you go this route, carefully review your plan so you know what the monthly premiums, deductibles, limits, co-payments are, and what exactly is covered.
Visit HealthCare.gov to find out what your options are for health care. With the coronavirus still prominant in the U.S., it’s more important than ever to have a health care plan in place.
Do I Have to Pay Taxes on Unemployment Benefits?
Yes, unemployment income is taxable. When you file for unemployment, you can elect how much you want to have withheld from your unemployment payments. Just like with your regular income, these withholdings will be used to pay for taxes. However, you may still owe when tax season rolls around.
You’ll receive a special tax form (Form 1009-G), which will show how much tax you owe in unemployment taxes, if any.
Is There Other Assistance Available?
In addition to the increase in unemployment benefits, the CARES Act also provided a one-time stimulus payment that will be provided to many taxpayers. If you make $75,000 or less and are a single filer, you can expect to receive $1,200. If you’re married, you can expect to receive $2,400 total as long as you earn a combined income of less than $150,000.
If you are over this income threshold, you may still receive a smaller stimulus payment. Parents will also receive an additional $500 per dependent child.
In addition to this payment, there are other programs available to make unemployment more manageable including the Supplemental Nutrition Assistance Program (SNAP). For more information on assistance programs you might be able to apply for, visit USA.gov.
Your local government may also be providing additional assistance for unemployed or low-income workers during this time.
11 Things to Do When You’re Unemployed
Now that you understand the foundational aspects of the current unemployment landscape, let’s put a plan into action so you can get all your affairs in order. Whether you’re trying to figure out what to do now that you’ve lost your job or are preemptively researching what to do if you get laid off, there are some important steps to take to keep your life on track.
Here are our recommendations for what to do when you’re unemployed:
- File for Unemployment Benefits
- Find Out What You’ll Get from Your Employer
- Explore Healthcare Options
- Contact Bill Providers
- Reassess Your Debt
- Fine-Tune Your Budget
- Figure Out How Long You Can Get By For
- Take On Side Work
- Plan Your Next Big Move
- Stay Active
- Give Yourself a Moment
1. File for Unemployment Benefits
While this may seem like an obvious one, you’d be surprised by how many people don’t bother to file for unemployment with their state’s unemployment office when they are laid off. For the quickest processing, you should file for unemployment online.
“Typically, anyone classified as a W2 employee [not an independent contractor] is eligible for unemployment benefits—unless they were fired due to gross misconduct, but it doesn’t hurt to file a claim anyway,” explains Dan Kellermeyer, president of New Heights Financial Planning. “Unemployment income won’t completely replace your wages, but your employer has paid for these benefits, so you might as well use them.”
The rules for claiming unemployment in the U.S. are essentially the same: you generally need to have earned a minimum amount in wages before filing an unemployment insurance claim through the state you live in, must be unemployed through no fault of your own, and are able to work and are actively seeking work. However, specific eligibility requirements and compensation amounts vary depending on the state you live in.
Because it can take a few weeks for your unemployment application to go through, you’ll want to file as soon as possible. You can start filing the day you get the pink slip. Just remember, filing can be frustrating but don’t lose hope. Stay steady while submitting your application to ensure you can get the help you need.
2. Find Out What You’ll Get from Your Employer
You’ll also want to have a sit-down with your boss or Human Resources department check to see what to expect in terms of a settlement, salary and any bonuses, plus vacation pay and extension of any other benefits, recommends James Q. Rice, CFA of JQR Capital.
“Usually these are paid in a lump sum,” says Rice, “and depending on whether they’re paid before the end of the calendar or next year, could have tax implications.” The money you’re getting from your employer will help tide you over until you land your next job, and should be factored in accordingly.
Knowing how much money you’ll have available to you will help you make the best choices when you’re trying to figure out what to do when you’re unemployed.
3. Explore Healthcare Options
If health insurance was offered by your employer, you have 60 days to decide whether to continue coverage through COBRA, which extends your current medical coverage for up to 18 months. Note that it could take up to a month for your paperwork to get processed, and typically costs a pretty penny. Or you can apply for different insurance coverage through HealthCare.gov.
Keep in mind that with COVID-19 still spreading, getting health insurance should be at the top of your list in case you need serious medical care.
4. Contact Bill Providers
If you anticipate difficulty in paying off your bills and credit cards, contact your cable and internet providers, the gas company and auto insurer to let them know about your situation. There’s a chance they may be able to offer you a temporarily discounted rate or offer you less-expensive options. For instance, I was able to get a promo rate for a year on my internet. And I opted for a cell phone bill with less data, at least until I got my bearings.
<h3id=”list5″>5. Reassess Your Debt
Take a look at your debt load. Would refinancing make sense and save you money in the long run? If you’re saddled with student debt, the coronavirus CARES Act includes a reprieve until September 30, 2020. For borrowers with federal student loans, no interest will accrue. This will be automatically instituted, so borrowers don’t have to sign up. If you have private student loans, you might consider deferring or asking for a forbearance with your student loan servicer for the time being.
As for your credit cards, it’s super important that you at least pay the minimum amount due. Otherwise, your credit score will get dinged. If you think you’ll have trouble making payments on your credit cards, reach out to the issuer. Most credit card companies have what’s known as a Hardship Department, and they may be able to offer a hardship plan. For instance, they could lower your interest rate, offer a smaller minimum payment or lower your fees and penalties.
Note that the credit card issuer will look at every situation on a case-by-case basis. What they may extend to you may not be the same as the next person. Also, you typically need to be in good standing with the credit card company to be considered. Reaching out to the credit card company before things actually go south is a sign you care and you’re responsible, and they’re more likely to respond favorably to that.
6. Fine-Tune Your Budget
Because of the change in your income, it is essential to reassess your budget after being laid off to see which areas you can cut back on. I remember carefully going over each of my expenses and trying to resort to living circa college survival days. I biked and took public transit as much as I could. I cooked most of my meals, only bought what was on sale, and committed to a no-spend challenge on non-essential items. Downloading a budgeting app like Mint can help you view all of your expenses, set your budget and keep your spending on track.
Besides contacting all my service providers and utility companies to see if I could get a better deal, I also reviewed my insurance policies to make sure they were still relevant to my situation and needs. While I didn’t end up making any changes, you might find that because you’re not commuting to work, switching to, say, a pay-per-mile auto insurance plan might be a better fit for your current scenario.
7. Figure Out How Long You Can Get By For
Between the settlement amount from your old employer, unemployment benefits, and the cash you have stashed in your emergency fund, figure out how many months you can reasonably get by without a steady paycheck. “Knowing this number will make you feel less stressed, and not knowing this feels like panic for some folks,” says Ian Bloom, a financial planner with Open World Financial Planning. “ ‘Oh no, I need a job now!’ is worse than ‘Oh…wow. Okay, well I’ve got four months to figure this out.’ “
8. Take on Side Work
While you’re looking for your next job, take on side jobs to boost your cash flow. You never know, these “bridge gigs” could potentially land you your next opportunity. Because I had been moonlighting as a freelance writer while working full-time, I had secured enough work to pay for half of my expenses. And having that existing base allowed me to pursue more freelance opportunities, which gave me the confidence to foray into it full-time.
I also took on side jobs test proctoring and pet sitting. That was extra money that helped me get back on my feet and not feel so anxious while I tried to figure out what to do next. FYI: If you’re taking on side work, you’ll most likely have to report it to the unemployment office, which can affect how much you’ll receive in unemployment.
9. Plan Your Next Big Move
Yes, it can be deflating to your ego when you’re unemployed. Yes, you may feel a mixture of sadness, anxiety, and stress. But it could also be an opportunity to figure out what you ultimately want to do career-wise and take steps to get there.
While the clock may be ticking depending on what your financial situation is, knowing you have a few months to figure out your next move allows you the option to do a career pivot, get your learning on, or explore work opportunities you weren’t able to do at your previous job.
10. Stay Active
When you become unemployed it can be tempting to become consumed by your favorite streaming service or scouring the internet for ways to fix your situation. However, one of the best things you can do for both your mood and physical health is to stay active. Right now there are many free resources you can take advantage of to help you stay mentally and physically healthy while staying inside.
11. Give Yourself a Moment
Being laid off can be overwhelming, which is why it’s important to give yourself time to process and take a breather. Once you’ve tackled the essentials on our “what to do when you’re unemployed” list to ensure you’re on the right track, allow yourself some time to reflect and relax. Indulge yourself in activities you enjoy, catch up on some sleep, or try something new.
Trying to figure out what to do when you’re laid off is stressful and time-consuming, allowing yourself this luxury will help you cope with the changes in your life and make your transition easier.
While being unemployed has an emotional and financial strain, while it’s tempting to hit the “panic” button, take a breather and follow these steps for what to do when you get laid off instead. Doing all you can to help you stay on top of your money situation will help you feel like your back’s not against the wall. In turn, you can make the most of things, and potentially forge a new career path.