Unemployment: The Six-Step Survival Guide
1. Apply for unemployment benefits immediately and maintain health insurance.
Aside from any severance pay you receive, unemployment benefits will likely be one of your main income sources. Even if you think you don't need it right away, apply immediately with your state's employment division. That's because many states don't start paying benefits until a few weeks from the day you apply. Your benefit is calculated based on your earnings during a base period, and will continue for a specific time under your state's laws. While this amount will replace only part of what you were earning, it should cover some of your bills.
2. Maintain Your Health Insurance
Health insurance is probably your biggest personal and financial concern during unemployment. If you can't continue group health insurance coverage with your former company (and cannot be added to a spouse's policy), your most cost-efficient alternative could be to continue coverage under the "COBRA" provision of federal law. COBRA assures former employees of many companies that they, their spouses, and dependents can continue health coverage for at least 18 months after a job loss. Because you usually have only 60 days from the day you lose group coverage to elect COBRA, it's important not to delay applying for this extension.
Though COBRA can cost up to 2% more than your former company's cost, it is usually less expensive than coverage you could obtain on your own. For instance, if you were paying $50 monthly under your group health plan, your employer may have been paying an additional $250. Therefore, in this example you might pay $306 monthly, or 2% over the total $300 group cost. Non-group policies you buy on your own often could cost twice the actual amount of your group policy. And, unlike policies you would purchase, you won't have to qualify for COBRA coverage or be concerned about preexisting conditions. If you think you can get a better deal on your own (and qualification restrictions don't daunt you) comparison-shop first among short-term insurance, which may be cheaper than more traditional health policies. You may even be able to get a group discount through your alumni or professional organization.
