The first 30 days after a layoff

A layoff arrives with a stack of paper and a set of deadlines that do not announce themselves. Most of the damage people do to themselves in the month after losing a job comes from missing one of those dates, or from signing something on the day it was handed to them. This page walks through the month in order.

The first day: the unemployment claim

File the claim now. The Department of Labor's guide to filing is clear that a claim is filed with the state where you worked, and that benefits are paid from the week the claim is filed rather than from the day the job ended. Waiting to see whether severance covers you costs weeks that are never recovered. The first payment generally takes two to three weeks, and the state decides whether and how severance pay delays or reduces benefits, which varies. How to file for unemployment covers the base period, the weekly certification and the appeal.

Gather the pieces the claim needs while they are easy to find: the employer's legal name and address, your dates of employment, your last pay stubs, and any letter stating the reason for the separation. Being laid off is the clearest qualifying reason there is; keep the letter that says so.

The first week: the health coverage decision

Employer health coverage usually ends at the end of the month of the layoff, sometimes on the last day of work. Two doors open at that point and both close after 60 days. Under COBRA, the Labor Department's employee guide explains, most employees at employers with 20 or more workers can continue the same plan for up to 18 months, paying the full premium plus up to 2 percent. Under the Affordable Care Act, HealthCare.gov opens a special enrollment period for anyone who loses job-based coverage, with a plan to be selected within 60 days before or after the loss.

The choice depends on income for the rest of the year, which decides the Marketplace subsidy, and on which doctors and prescriptions matter. Health insurance after a layoff sets both options out with the deadlines.

Before signing: the severance agreement

Severance is not required by federal law. The Labor Department's page on severance says so in one line: there is no requirement in the Fair Labor Standards Act for severance pay; it is a matter of agreement between employer and employee. That is why the money always comes with a document, and the document always asks for something, usually a release of claims. Read it for the release, for any clause about what you can say later, for how and when the money is paid, and for the date by which you must sign. If a WARN notice was owed and not given, the WARN guide explains that 60 days' pay in place of notice is what the Act would have awarded, which is worth knowing when the offer is being read. Severance: what is negotiable goes through the terms.

The second week: the accounts

The 401(k) does not have to move. Leaving it with the former employer's plan, rolling it to an IRA or to a new employer's plan are all available later, and the mistake to avoid is taking a distribution to cover the gap: it is taxed as income and, under 59½, usually carries a penalty. Check the vesting statement for any employer match that had not vested; that portion is lost, and knowing the amount matters if severance is being negotiated.

Final pay and unused leave are governed by state law, and the final pay stub should be checked against the last day worked. A flexible spending account balance for health costs is usually forfeited at the end of coverage unless COBRA is elected for it, which is one of the small decisions the 60-day window covers.

The third week: the paper that fixes the record

If the layoff was part of a larger cut, two documents record it. A WARN notice, where one was required, is posted by the state and names the site and the number of jobs; the state tracker links each state's listing. A public company reports a restructuring in an SEC filing, an 8-K under Item 2.05, which gives the percentage of the workforce affected and the cost; how to read an 8-K Item 2.05 explains it. Both are worth reading, because a later dispute about what was promised or why the cut happened is settled by documents, not by memory.

The fourth week: taxes and the next job

Unemployment benefits are taxable, and withholding is optional; taking it avoids a bill at filing time. Severance is wages and is taxed as such when paid. If the year's income will end up far below what the old salary implied, the Marketplace subsidy and several credits change with it, which is a reason to revisit the health coverage choice once the picture is clear.

Everything above has a document behind it, and every document has a date. Keeping the layoff letter, the severance agreement, the COBRA notice and the unemployment determination in one folder is the single most useful thing to do in the first 30 days.