Think carefully, make good use of your time, and fight for more rights for yourself.
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Editor's brief: When it comes to unemployment, many people may fall into endless anxiety and confusion. But if that day does befall us, what should we do? This article is from a compilation, in which the author shares eight financial survival guides for you after losing your job, I hope it will inspire you.
***matt rota
Unemployment is one of the biggest stressors we face in our lives. Thousands of people in the United States have lost their jobs in recent months, and many of them are facing this tragic outcome for the first time since entering the workforce.
When it comes to personal finances, many aspects of our lives are actually entangled with our employers, and the shock of a sudden job loss can feel incredibly unstable. All of a sudden, we may be faced with many things, such as finding a job and dealing with various difficult family matters without a stable and secure income.
In such cases, the unemployed are often faced with some major financial decisions, including a series of trivial things, such as filing for unemployment benefits, etc. In addition, the most important thing is probably what to do next after losing your job.
You can give yourself some time to think about this, but it's better not to do too much. Some items may also have a time limit.
Many employees, especially those in the tech sector, are fortunate enough to receive severance compensation when they lose their jobs. While not all severance options are negotiable, you should at least give them a try.
A separation or severance agreement between the company and the employee is a valid contract. "The terms of the contract are negotiable." ”
Jennifer Liu, managing partner of the law firm Liu Peterson-Fisher in Burlingame, Calif., says that whether you hire a labor lawyer or not, additional legal advice and strategies can sometimes get you the best terms.
There's guilt, compassion, and fairness. "There's also personal relationships." If you have a good personal relationship with the head of the HR department, then I recommend talking to them specifically. "If your family is already in some kind of crisis and you want to get a better separation package, you might as well say it.
Jennifer Liu said that severance agreements offered by small and medium-sized employers often contain less favourable clauses, especially non-compete clauses. She also mentioned that these businesses sometimes impose these terms on low-paid employees who may most need to find a job right away. In this regard, she suggested that try to modify or even delete the terms.
In addition, "non-depreciating agreements" are often problematic regardless of the size of the employer. "Ten likely, such clauses would require that the departing employee not disparage the employer in one way or another, and we always believe that such clauses should remain equal. She added.
If you want to make a big deal out and publicly criticize or disagree with your employer and decide to reject the severance agreement, you may be putting yourself in a more stalemate in negotiations. In some U.S. states, including California, there may be some legal protections for employees who wish to speak publicly about employer-related issues. However, you should not assume that you have these protections, so it is best to speak with a lawyer for further information.
I've had cases where it's really important for clients to be able to talk openly about some of what they've been through. "And the employer says to them, 'What is the price to pay if we keep you silent?'" ’”
Time can be as valuable as money during layoffs, and there are many ways to ask for more time. Jennifer Liu suggests that you can also buy a few more months to exercise your options**, especially if there is a shortage of funds at the moment.
You can also ask the company to extend your employment period slightly, and you can even ask for a salary for the extended period, so that you are more likely to receive more compensation-related to the option. This approach can also be helpful in finding a new job, after all, it may also be easier to find a new job when you haven't left the company in theory. Alternatively, you can try to negotiate an accelerated acquisition of ownership of any options.
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The next step is to figure out how much money you need to cover the various expenses. You can also consider whether your spouse's or partner's income will cover your expenses for a while. If you save an emergency fund ahead of time, can you calculate how long that money will keep you alive before you land your next job.
In addition to this, you can also consider whether there are any expenses that can be used to cut expenses. If you need more cash, perhaps your partner can temporarily lower the pension base.
In short, these are reasonable choices. "For now, it's about cash, not about the future," said Mk Lee, who provides financial planning services to many tech workers in Tacoma, Washington. ”
Unemployment insurance can provide cash benefits to employees who have lost their jobs through no fault of their own and allow them to pay other necessary expenses while looking for a new job. In terms of amount, unemployment insurance is certainly not as good as the previous fixed salary, but it can at least serve as a temporary relief.
In the U.S., each state has its own unemployment insurance benefit program, so there may be geographic differences in rights. But in general, the amount of unemployment insurance is a percentage of your income level over the past year, which is about 40% to 45% of your average weekly salary for that period, with slight caps.
For example, according to the Center on Budget and Policy Priorities, a U.S. think tank that analyzes the impact of federal and state** budget policies, the average weekly unemployment insurance benefit in the U.S. was around $387 at the beginning of 2020, with a minimum of $215 in Mississippi and a high of $550 in Massachusetts.
In most states, unemployment insurance can be paid for up to 26 weeks (about six and a half months), but there are regional variations in this figure, according to the center. More than a dozen states have fewer than that number of weeks of unemployment insurance coverage, and two more states have received unemployment insurance for more weeks.
In general, you will need to file an unemployment insurance application with the state where you work. The U.S. Department of Labor has compiled a list of offices in all 50 states that accept the application, including contact and links where you can learn more about the rules and information you need to apply.
For example, if you're still receiving severance pay in installments, you may not be eligible to claim unemployment benefits in some states, or you may only be able to receive a lower amount.
According to Michele Evermore, a senior fellow at the Century Foundation, a nonprofit public policy research organization in the United States, it usually takes a few weeks after an unemployment insurance claim is made to determine a claimant's eligibility before receiving unemployment insurance (which is subject to federal income tax and most state income taxes).
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If your employer has health insurance for you, the first step you should be to find out when that coverage will be discontinued. For example, it could be your last day on the job. Of course, if your employer offers you better terms of severance, it may last for a few months after you leave the job.
Then, you'll need to evaluate your next best options. The simplest and most familiar form of Cobra insurance is often the most expensive option, so it's often prohibitive. Choosing to continue with Cobra insurance means that you will be responsible for the portion of the premiums paid by your previous employer in addition to your own portion of the premium.
In the U.S., many companies offer health insurance for their employees, often called a group health plan. With this type of insurance, all members of the same organization are entitled to the benefits of the plan, including reimbursement for hospitalization, outpatient expenses, and medications. In 1985, the U.S. Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows terminated employees to decide whether to continue to purchase group health plan coverage for themselves or their families for a limited period of time, usually no more than 18 months.
However, if you have a chronic medical condition, are pregnant, or have other ongoing medical needs, you should seriously consider purchasing Cobra insurance. "Continuing to pay your premiums means you don't have to change your doctor or prescribe medications, and you don't have to start running over your annual deductible. Karen Pollitz, a senior fellow at the nonprofit Kaiser Family Foundation, suggests.
If you are married or your partner has health insurance provided by your employer, you can also share your partner's health insurance benefits during the Special Enrollment Period (SEP) if you lose your coverage. Even if the health insurance you have for yourself (or your partner or even your children) is interrupted after you are dismissed, this will not affect your enjoyment of these benefits.
There is also the possibility of purchasing health insurance that meets the requirements of the Affordable Care Act, but these plans are often less comprehensive than those provided by employers. In fact, until December 31, 2025, these plans will be eligible for additional subsidies, which means that more people will be eligible to purchase these plans at a cheaper** price than they were before the pandemic (sometimes combined without paying a monthly premium). In addition, in many U.S. states, you may be eligible for Medicaid if your income falls below 138% of the federal poverty level.
Federal Medicaid may actually be a better option, Politz said. Getting Medicaid, she said, depends largely on your current household income. So, if you earn**, or even lose it altogether, you have a chance to get Medicaid. In contrast, for medical insurance that meets the requirements of the Patient Protection and Affordable Care Bill**, the ability to receive subsidies is mainly based on annual income.
So, if you earned 6 a year before you were fired$50,000 and an expected income of zero for the remainder of the year, then when assessing whether you are eligible for the subsidy, it will be as follows 6$50,000 as a baseline. "Medicaid has zero premiums in most states and has little to no additional cost. "And the coverage is also more comprehensive." ”
If you were laid off and belong to the age group of 65 and older, you should apply for Medicaid. In fact, Politz added, you may also be eligible for Medicaid if you have a low income; This will cover your Medicare Part B premium, which includes the cost of doctor's visits, outpatient care, and other items.
Translator's note: Medicare consists of two parts: A and B. a Part is hospitalization insurance, which primarily reimburses the cost of hospitalization for illness, nursing home care, hospice care and home care; Part b is medical insurance, which mainly reimburses outpatient visits, medical supplies and preventive care.
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If you have a flexible spending account, you'll want to use as much of that money as you can before you leave your job.
A Flexible Spending Account (FSA) is a special account provided by a U.S. employer for employees that can be opened at the same time as the employee's annual insurance purchase. Once opened, it cannot be changed throughout the year. The account is owned by the employer, and employees can put a portion of their pre-tax salary into the account each month and use it for eligible expenses during the year, which can be divided into health care flexibility expenses (such as prescription drugs or medical equipment) and dependent care expenses (such as child care or kindergarten expenses). This part of the funds is not subject to tax deduction, but it must be used up within the current year, otherwise it will be invalid after expiration.
Another particular advantage of a Healthcare Flex Spending Account is that all the money you plan to deposit into the account can be advanced in advance, which means you can spend in advance what you plan to put into the account from the remaining months of your salary for the year. So, if you plan to deposit a total of $2,750 that year, but are fired at the beginning of the year, you can still "spend" all your money before you officially leave the company.
If you use up the balance in your Flexible Spending Account, your employer will not be entitled to deduct the amount from your last paycheck. Nicky Brown, vice president of public policy and ** affairs at healthequity, a benefits management agency, said.
While not all rules are the same, in general, they must be incurred on or before the last day of employment. In any case, it's best to check with the person in charge of your company or the HR department for specific details.
On the other hand, a dependent care expense account is different: you can only use money that has actually been deposited into the account. For example, if you plan to deposit a total of $5,000 for the year, but only deposit $350 before you leave, you can spend up to $350.
If you have a Health Savings Account (HSA), which is usually limited to people who have purchased high out-of-pocket insurance, the money in the account is your own and there is no deadline for spending. In fact, if you don't need to use it to pay for health-related expenses, you can also use it for investment, and the money in your account (including interest and investment income) is tax-free.
If you advance expenses from a 401(k) or 403(b) pension plan, you must repay the advance as soon as possible. Otherwise, the difference may be treated as a taxable distribution (and an additional 10% penalty is usually levied if you're under 55).
Different borrowing programs have different rules. According to Fidelity Investments, the largest provider of 401(k) pension plans in the United States, some plans require you to repay within 60 to 90 days of the advance from your pension plan, but others may allow you to continue to pay after you leave your job. In summary, it is recommended that you understand the specific details of the person in charge.
If you don't pay it on time, there's another workaround: you can transfer that amount to an Individual Retirement Account (IRA) so you can avoid taxes and penalties. Theoretically, this is a rollover and a good solution, but only if you do it before you file your taxes the next day.
If you don't have an advance from your pension plan, you still have to deal with the question of what to do with your retirement account. You may be able to keep your money in your old employer's plan, but you may also be able to evaluate whether it's worth rolling it over into an IRA or a new employer plan (some employers may have a limit on the amount you can roll, such as $5,000).
It is important to note that any changes to the account are done on a direct rollover basis. Therefore, it is best to check with the person in charge in advance to avoid tax liabilities arising from any operation.
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If your employer has offered you any type of remuneration or options, you should check the documents you have received, which must specify the specific rules, especially the period of exercise after separation.
Different compensation has different tax obligations, and some are certainly more advantageous than others. In addition, you may need to take action as soon as possible.
For example, a Restricted** Unit (RSU) must be cashed out by the last day of work or it will be automatically forfeited. However, some employers offer employees a plan in their severance clause that allows them to acquire** or option ownership, allowing them to be paid more when they leave the company.
But the option (which allows you to buy the company at a fixed price) usually expires 90 days after the date of separation. Some may expire later, but for so-called incentive** options (ISOs), there may be more favourable tax treatment if the option can be exercised within the three-month window.
In conclusion, there are many factors that need to be weighed. "How many options do I want to exercise and hold?" How much do I want to sell right away? M.K. Lee, a financial planner, said.
It all depends on the exercise (or the cost associated with the purchase), the transaction (publicly traded only), the amount of cash you can use to make the purchase, the potential tax business, and so on.
If you don't have the cash to exercise the option (or pay the resulting tax bill), you can also borrow money from some companies that offer loan services and take on most of the risks involved in such transactions, but it is advisable to make these decisions under the guidance of a professional financial advisor who will also put your personal interests ahead of their own in the process.
It is best to discuss the decision to exercise an option with a tax advisor or financial planner, as there are many tax pitfalls involved. AJ Ayers, a financial planner and co-founder of financial advisory firm Brooklyn Fi, said.
Any insurance benefits that come with work, including life and disability insurance, may be interrupted after leaving the company. It is possible to extend your life insurance coverage for a period of time in your severance agreement, but it's a good idea to reconfirm it yourself.
However, most employers generally don't offer the most comprehensive coverage, so it's a good time to evaluate your needs. "If you're going to spend your income on other dependents, such as young children, you're better off finding a term life insurance plan that doesn't depend on your employer. ”
When you are young and healthy, it is cheaper and easier to get coverage for term insurance.
It is also worth mentioning that there are also employers that offer life insurance that is portable, which means that you can take the policy with you after you leave the job and continue to pay the premiums yourself. However, according to Jennifer Fitzgerald, CEO of PolicyGenius, a New York insurance company, paying your own premiums can be more expensive than buying a new one. "However, if you have had difficulty getting approved for life insurance before, it's also a good option. ”
According to PolicyGenius, disability insurance costs a lot more, about 1% to 3% of your income level for basic coverage. Because of this, many people don't consider purchasing disability insurance.
Translator: Shunichi.
Translation, if applicable**, please indicate the source.