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Seven tips for recovery after you lose your job

BY KATHY KRISTOF | Los Angeles Times

June 1, 2008

Lost your job? Here's the first thing to remember: Stay calm.

Here are several steps to survive a sudden job loss without economic ruin. But time is of the essence. "Don't ignore it. Don't think it will go away," said David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, which represents nonprofit counseling services. "You don't need to panic, but you do need to address it right away."

1. Ask questions

Before leaving your workplace for the last time, you should know what kind of compensation package you'll take away. Is the company giving you severance pay? If so, how much?

What is happening to your vacation time? You are legally entitled to be paid a lump sum upon your departure for the vacation days you have accrued but haven't taken. (You're not, however, entitled to be compensated for unused sick days.)

Some companies will give you the option to take remaining vacation days -- effectively delaying your official termination date - instead of getting a cash payment for them. That could mean a few extra weeks or months on the employer's health plan - extra coverage that could be worth hundreds of dollars or more.

2. Understand COBRA

A federal law -- the Consolidated Omnibus Budget Reconciliation Act of 1986, known as COBRA -- in most cases allows you to continue getting health insurance under your former employer's plan. The catch is that the company probably will stop subsidizing the premiums, so your monthly payments could double or triple.

That may still be a good deal, especially if you are older or have serious medical issues. But you should first investigate potentially cheaper options.

If your spouse has health coverage, find out whether you can join that plan. (Usually the rules allow a spouse who has lost a job to be added to a plan at any time, not just during the "open enrollment" process.)

You may also want to check the cost of securing an individual policy by calling a broker or going to any one of a dozen Web sites that can help you compare insurance rates. But don't delay. Unlike group plans, which generally don't require medical examinations to join, individual plans do. If you don't pass the exam with flying colors, the price of the policy could go up -- or you might not be eligible for it at all.

If you can't get other coverage at a reasonable cost, you probably will need COBRA. But you have to sign up for it within 60 days after your job ends. If you miss the deadline, the COBRA option evaporates.

3. Apply for unemployment

Unemployment benefits won't handle everything. The payments typically cover no more than 35 percent of lost wages. The percentage can be a lot lower for highly paid workers because each state caps how much you can get per week.

That may not be much, but it can help slow the drain on your savings. However, the payments take time to process, so apply as soon as possible. The sooner you do, the sooner the checks start coming.

The benefits normally can last six months. Congress sometimes lengthens the period during economic downturns.

4. Learn your rights

Depending on the circumstances of your job loss, you might be entitled to greater severance payments or extended unemployment benefits.

If you lost a job because of foreign competition -- for example, your employer moved production overseas -- you could be entitled to as many as 52 weeks of unemployment benefits, plus 104 weeks of educational training assistance.

If you were part of a massive layoff or plant closing, you might be covered by the federal Worker Adjustment and Retraining Notification Act. Known as the WARN Act, the law requires your employer to give you 60 days' notice or pay you 60 days of back wages. Certain industries and small employers are exempt.