How to Manage Your Money After a Layoff

Unemployment insurance provides cash benefits to workers who lost their jobs through no fault of their own and pays the money out while they’re searching for a new job. It won’t replace the income from your paycheck, but it can provide temporary relief to those who have earned enough to qualify.

Each state administers its own program, so the rules vary. But unemployment insurance generally replaces a percentage of your income from the past year, roughly 40 percent to 45 percent of the average workers’ weekly wage, subject to certain maximums. For example, in early 2020, average weekly benefits were about $387, but they ranged from a low of $215 in Mississippi to $550 in Massachusetts, according to the Center on Budget and Policy Priorities. In most states, the benefits generally last up to 26 weeks, though a dozen states provide less weeks of benefits and two others provide more, according to the center.

Generally, you file a claim for unemployment benefits with the state where you worked. The Department of Labor has a list of all 50 states’ offices, with phone numbers and website links, where you can learn more about the types of information you’ll need handy to apply, as well as your state’s rules. For instance, some states won’t provide unemployment benefits if you are receiving severance pay, or you may only qualify for a lower amount.

After you apply, it could take several weeks to become qualified and to start receiving benefits (which are subject to federal income taxes and most state income taxes), said Michele Evermore, a senior fellow at the Century Foundation, a nonpartisan research and policy group.

If you had health insurance through your employer, your first step should be to find out when that coverage ends — it could be on your last day, for example, or it could last several months after you’ve left if you have a generous severance package.

Then, you’ll need to evaluate your next-best options. The easiest and most familiar, COBRA — or continuing your employer coverage, usually up to 18 months — is typically the most expensive option, often prohibitively so. (That’s because you’ll now be paying your employer’s share of the premium, in addition to your own.)

But it can be worth considering if you have a chronic condition, you’re pregnant or have other medical needs that require continuing care. “Continuation coverage means you won’t have to switch doctors or drug formularies or restart your annual deductible,” said Karen Pollitz, a senior fellow at the Kaiser Family Foundation.