Unemployment Help
March 2, 2009, 8:57 am
5 Answers for the unemployed and underemployed
At Springboard, we hear from people in financial distress all day every day. With the economy in turmoil, more and more people are facing sudden unemployment. They have many questions, and often request help getting by.
Here are just a few of the more common questions we hear. There's much more free educational material, personal budget planning tips and budget calculators available at our web site, www.credit.org. We also have a full staff of experienced, compassionate credit counselors who can help answer any of your questions.
1. 401k Tips: Should I tap into my 401(k)?
a. When people find themselves suddenly unemployed, they are usually eager to replace their lost income as fast as possible. Unfortunately, when new jobs are scarce, it's all too tempting to reach into retirement savings to make ends meet.
We urge anyone in financial crisis to avoid cashing in their retirement accounts early. Using a 401(k) for living expenses should be a last resort.
Tapping into your 401(k) early will leave you strapped when you need those funds most – in your retirement. Also, that money (if not repaid within set guidelines) will be treated as taxable income, so you'll be throwing a significant amount of your money away on taxes and early withdrawal penalty fees.
Your 401(k) is meant to provide for you in your retirement; these tips should urge you not to use it for anything else. We have a free 401k savings calculator on our site, to help you with your decision.
2. What do I do about health care coverage? What is COBRA?Tapping into your 401(k) early will leave you strapped when you need those funds most – in your retirement. Also, that money (if not repaid within set guidelines) will be treated as taxable income, so you'll be throwing a significant amount of your money away on taxes and early withdrawal penalty fees.
Your 401(k) is meant to provide for you in your retirement; these tips should urge you not to use it for anything else. We have a free 401k savings calculator on our site, to help you with your decision.
a. COBRA is a federal law pertaining to employers with more than 20 employees, but some states extend eligibility to smaller employers. COBRA allows you to stay on your employer's health care plan after you lose your job. You're responsible for the costs of the coverage, but this will keep you insured while you are between jobs. The catch is that employers no longer pick up a share of your premium, so you'll likely see a dramatic price hike.
When you are laid off, check with your human resources department before you leave; they can give you the information you need to make sure you apply for COBRA coverage within the required deadlines. If you don't enroll right away and have a medical emergency, you may be able to sign up for coverage if it's within 60 days, but you'll have to pay the required coverage since the time you left your job.
After you've used COBRA coverage for 18 months, you can look into HIPAA (Health Insurance Portability and Accountability Act). This may help you guarantee access to renew your coverage. For more information, check out the "for consumers" section of the National Association of Insurance Commissioners web site at www.naic.org.
3. What about claiming unemployment benefits?When you are laid off, check with your human resources department before you leave; they can give you the information you need to make sure you apply for COBRA coverage within the required deadlines. If you don't enroll right away and have a medical emergency, you may be able to sign up for coverage if it's within 60 days, but you'll have to pay the required coverage since the time you left your job.
After you've used COBRA coverage for 18 months, you can look into HIPAA (Health Insurance Portability and Accountability Act). This may help you guarantee access to renew your coverage. For more information, check out the "for consumers" section of the National Association of Insurance Commissioners web site at www.naic.org.
a. If you are laid off, you should check with your state unemployment office and inquire about filing a claim. If your termination was other than a lay off, it is wise to check if claiming unemployment benefits may still be available to you.
Springboard maintains a list of links to every state unemployment office on our web site: http://credit.org/resources/Links/unemployment.
Springboard maintains a list of links to every state unemployment office on our web site: http://credit.org/resources/Links/unemployment.
4. What happens to my unemployment benefits if I get a part-time job?
a. This will vary from state to state. You should check with your state unemployment office and find out how part-time employment will affect your benefits.
In some states, you can collect unemployment benefits, but they will be reduced by the amount you earn from your job. You also will be held to strict standards as to how many hours you can work and still remain eligible for unemployment benefits.
5. What should I do about my debts while I am unemployed?In some states, you can collect unemployment benefits, but they will be reduced by the amount you earn from your job. You also will be held to strict standards as to how many hours you can work and still remain eligible for unemployment benefits.
a. A credit counselor may be able to help you negotiate lower payments that can help you through a financial crisis.
Whatever your debt situation, it's crucial that you not use credit cards as a substitute for income. Borrowing money for living expenses can turn a short-term crisis into a catastrophe. Seek help from a qualified non-profit counseling agency to avoid letting debt drag you into financial ruin.
Whatever your debt situation, it's crucial that you not use credit cards as a substitute for income. Borrowing money for living expenses can turn a short-term crisis into a catastrophe. Seek help from a qualified non-profit counseling agency to avoid letting debt drag you into financial ruin.
