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You were laid off

A layoff starts several clocks at once: an unemployment claim, a 60-day choice about health coverage and a decision about your 401(k). Write down your last day first, because most deadlines count from it.

First 3 things this week

About 30 seconds to read. Ticks stay on this device.

0 of 3 done

How it works

  1. File for unemployment insurance

    Each state runs its own program, so you file with the state where you worked. The Department of Labor says to file as soon as possible. In most states benefits last at most 26 weeks, the weekly amount varies by state, and the benefits are taxable income.

  2. Ask about severance in writing

    Severance comes from your employer or your contract, not from federal law. Ask what it is, how it is paid, whether you must sign a release, and how your state treats it for unemployment. Ask the same about final pay and unused vacation.

  3. Compare COBRA and a marketplace plan

    COBRA can keep your old plan for up to 18 months. You have 60 days to elect it, and the premium can be up to 102% of the plan's full cost. A marketplace plan on healthcare.gov may cost less, especially with a premium tax credit, and losing job coverage gives you a 60-day special enrollment period. Ending COBRA on your own does not open a new one.

  4. Decide what happens to the 401(k) before you touch it

    A direct rollover to an IRA or a new plan has no tax withholding. A check made out to you has 20% withheld: on a $20,000 balance that is $4,000, so rolling over the full amount within 60 days means adding $4,000 from other money. Cashing out adds the taxable part to your income, and before age 59 and a half it usually adds a 10% additional tax.

  5. Decide which bills to protect first

    Many people rank housing, utilities, food, insurance, transportation to work and minimum debt payments first. The CFPB says to contact your landlord, mortgage servicer and lenders early and ask for more time or a waived late fee. Federal student loan servicers can explain payment plans based on income.

A worked example

Sample, not your numbers

Six months with unemployment benefits, with and without COBRA

Sample numbers: $9,600 in savings, $3,200 a month of essential spending before health insurance, and a state that pays $400 a week for 26 weeks before tax. The old plan costs $780 a month in full.

Savings alone cover
3 months
Six months of essentials
$19,200
Benefits, $400 x 26 weeks
$10,400
Shortfall before health insurance
$8,800, covered by savings
COBRA at up to 102% of the plan
$795.60 a month
Shortfall with six months of COBRA
$13,573.60, which is $3,973.60 more than the savings

Health coverage can decide whether the savings last. That is why the coverage comparison comes before the first rent payment. Tax on the benefit is left out.

What to ask HR, your lender or a tax pro

HR or the plan administrator

  • What is my last day, and on what date does my health coverage end?
  • Is there severance, how is it paid, and do I have to sign a release?
  • When do I get final pay and any unused vacation?
  • Can you send the COBRA election paperwork and the 401(k) direct rollover forms?

Your lender or landlord

  • If I may miss a payment, can you extend the due date or waive the late fee?
  • Do you have a hardship plan, and what proof do you need?

A tax pro

  • How should I handle tax on unemployment benefits and severance this year?

Run your own numbers

Chapter 4: emergency funds & financial security builds an emergency fund target from your own essential spending. Chapters 4 to 18 are Pro.

Sources

Figures read from these pages on October 6, 2026. Unemployment rules, benefit amounts, waiting weeks and final pay deadlines are set by each state, and they change. Severance and vacation payout are set by your employer or your state.

Education, not financial, tax or legal advice. The example uses sample numbers, and your own situation will differ.