Published in: Banks | April 22, 2020
What to Do to Prepare in Case You're Laid Off During COVID-19
By: Maurie Backman
Millions of people have already lost jobs due to COVID-19. Here's what to do if you fear you'll join their ranks.
COVID-19 hasn't only impacted the health of several hundred thousand Americans; it's also resulted in millions of unemployment claims. The ongoing health crisis has forced record numbers of people out of their jobs, and many fear it will get worse before it gets better. If you've managed to retain your paycheck thus far but are worried about a layoff in the not-so-distant future, here are a few critical steps to take.
1. Assess your emergency savings
If you lose your paycheck, you may be entitled to unemployment benefits -- we'll get into that in a bit. But those benefits may not replace your entire paycheck, or even come close, so if you're concerned about a potential layoff, take a look at your emergency fund and see how robust it is. Ideally, you should have enough cash in your savings account to pay for three to six months of living costs. Given that we may have a full-blown recession on our hands this year, it's a good idea to aim for the higher end of that range.
If you're not happy with the way your emergency fund looks, start saving every dollar you can as long as your job holds steady. You may even want to think about cutting back on certain expenses (say, not ordering takeout or delivery) to boost your savings while you can.
2. Think about health insurance
Getting laid off doesn't just mean losing your paycheck; it could mean losing your health coverage. And at a time when the country is deep in the throes of a health crisis, that's a scary thought.
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If you're worried you might lose your job, start exploring different options for getting health insurance. If you're married, you may be able to hop onto your spouse's work plan, albeit at a cost. You can also see about retaining your current health plan through COBRA. COBRA allows you to keep an existing health plan for up to 18 months, but since employer insurance is often heavily subsidized, you may find that this option is just plain unaffordable without a paycheck. Finally, you can start looking at plan options through healthcare.gov -- you should qualify to apply for a new plan if your existing coverage is terminated.
3. Know your unemployment benefits
You'll generally qualify for unemployment benefits if you lost your job due to no fault of your own (meaning, you weren't fired for something you did) and earned enough income to meet your state's eligibility requirements. The rules and process of filing for unemployment vary from state to state, but one thing you should know is that right now, all beneficiaries get a weekly $600 boost on top of the weekly benefit they're otherwise entitled to. Plus, benefits have been extended nationwide by 13 weeks on top of the existing benefit period you can get in most states.
You can also look at the way your state calculates weekly unemployment benefits to get a sense of how much money you may be entitled to if your job goes away. That information could help you better plan for that possibility.
Though it's a good thing to be positive about your job prospects even when the economy is getting battered, it also helps to face reality. If you're concerned about losing your job, prepare for that scenario ahead of time. That way, you may be less stressed if it actually happens.
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