Some employees receive a severance package when they leave a job, but most workers must rely on unemployment insurance benefits at some point whether or not they receive severance. Unemployment insurance pays workers for a set period of time or until they find a new job as long as they were terminated through no fault of their own. It is designed to provide an unemployed worker time to find a new job that is equal to the one that was lost, without suffering financial distress or feeling forced to take a job for which he or she is overqualified. In most states, benefits are paid for up to 26 weeks, but during recessions and periods of high unemployment, additional weeks of benefits may be added.
COBRA = The Consolidated Omnibus Budget Reconciliation Act Within certain conditions, requires your employer offer continuous health insurance to former employees, spouses and dependents.
Although the unemployment insurance system was established by the federal Social Security Act in 1935, it is based on a program of both federal and state laws. The system is supported by a combination of federal and state taxes that employers have to pay. The Federal Unemployment Tax Act implements the federal program, while every state maintains its own separate unemployment insurance program involving different rules.
States are taxed based on the total wages they pay employees, the amount they contributed to the unemployment fund, and the amount that discharged employees have been compensated from the Unemployment Trust Fund (the Fund). The unemployment taxes are deposited into the Fund. Each state makes deposits into separate accounts. There are certain states, such as California, that give additional unemployment benefits to workers who are disabled.
Unemployment Coverage Varies - Check Your State!
Unemployment benefits can be different from state to state, which such differences as:
Who is Eligible for Unemployment Insurance?
Terminated workers must meet state requirements for wages earned or time worked during an established period of time, the “base period.” Typically, this is the first four out of the last five complete calendar quarters before your claim is filed, but some states use other definitions. Workers are eligible only if they are unemployed through no fault of their own as defined by state law. Generally, workers who were fired because of serious misconduct, such as stealing, lying, or embezzling, are not eligible for unemployment insurance benefits.
You are entitled to COBRA benefits if:
You lose health insurance because of a reduction of work hours
You lose your job for any reason EXCEPT gross misconduct
When you file an unemployment insurance claim with the state where you worked, you will have to provide certain information, such as the date and address of your former employer. It can take 2-3 weeks after you file to receive your first unemployment insurance benefits check, so you should file as soon as possible. If you worked in a state other than the state where you currently live, or if you worked in multiple states, your own unemployment agency can give you information about how to file your claim.
After you are deemed eligible, you will need to continue to file weekly or biweekly claims and answer questions so that your state can make sure that you are still eligible for benefits. If you work as an independent contractor or freelancer during this period, you must report your earnings, and that amount will be deducted from your check. You also need to report job offers or instances where you refused work. The state may want to interview you, and you are required to attend the interview or risk a denial of benefits.
Health Insurance: Staying Covered If You Lose Your Job
You can purchase health insurance
Through your employer or former employer using COBRA (under certain conditions)
Purchase coverage in the private market or through a state exchange