If you just lost your job, do three things first: file for unemployment in the state where you worked, find out the exact date your health coverage ends, and list every bill due in the next 30 days. Those three steps protect your income, your health coverage and your credit while you figure out the rest. The checklist below puts everything else in order, with the deadlines that matter. Tick items off as you go; your progress stays in your browser.
Day 1–2Protect your income and coverage
- File for unemployment in the state where you worked (not necessarily where you live). Each state runs its own program; find yours through CareerOneStop. Benefits are usually counted from the week you file, so don’t wait.
- Get your separation details in writing: last day worked, final paycheck date, severance terms, whether unused vacation is paid out, and the date your health coverage ends.
- Use any health FSA money you can before your last day of coverage. Unless you elect COBRA, you usually lose access to the balance.
- List your cash and your bills: checking and savings balances, plus every bill due in the next 30 days. Use the budget calculator to see the gap.
Week 1Health coverage, severance and lenders
- Choose your health coverage (see the comparison below): COBRA, a Marketplace plan, a spouse’s plan or Medicaid. Don’t let a gap happen.
- Read the severance agreement before you sign. If you’re 40 or older, federal law generally gives you at least 21 days to consider an agreement that waives age-discrimination claims (45 days in a group layoff) and 7 days to change your mind after signing.
- Call your lenders before you miss a payment. Card issuers, auto lenders and mortgage servicers often have hardship programs, but they’re easier to get before an account is late.
- Federal student loans: contact your servicer about an unemployment deferment or a lower income-driven payment.
- Cut what you can pause: subscriptions, extra savings transfers and nonessential spending, until you know your new monthly budget.
Weeks 2–4Retirement money, taxes and help
- Decide what to do with your 401(k): leave it, roll it directly to an IRA or a new employer’s plan. Avoid cashing out; see what it would cost with the 401(k) early withdrawal calculator.
- Plan for taxes on unemployment. Benefits are taxable federal income. Ask your state agency to withhold 10% (Form W-4V) or set money aside.
- Figure out your runway: how many months your savings plus benefits cover your bare-bones budget. Try the emergency fund calculator.
- Watch for job scams. Real employers don’t charge you to start, send checks to “buy equipment” or ask for bank logins. Check a suspicious offer with the Scam Checker.
- Check other help: call or text 211 for local food, rent and utility programs, and check SNAP eligibility through your state.
OngoingStay on track
- Certify for unemployment on time every week or two and keep the job-search log your state requires.
- Pay at least the minimum on every debt and check your credit reports for free at AnnualCreditReport.com.
- Keep your tax forms: W-2 (including severance), 1099-G (unemployment) and 1099-R (any retirement distribution).
Health insurance after a layoff: your options
| Option | Deadline | Cost | Good to know |
|---|---|---|---|
| COBRA (employers with 20+ employees) | At least 60 days from the election notice | Up to 102% of the full premium (your share plus what your employer paid) | Same plan and doctors for up to 18 months. If you elect and pay within the deadline, coverage goes back to the day it ended. |
| Marketplace plan (HealthCare.gov or your state’s site) | 60 days before or after losing coverage | Based on your expected income for the year | A lower income after a layoff can mean bigger premium tax credits. Dropping COBRA early doesn’t open a new enrollment window, but COBRA running out does. |
| Spouse’s or partner’s employer plan | Usually 30 days after losing coverage | Their plan’s family premium | Losing your coverage is a special enrollment event for their plan. |
| Medicaid / CHIP | Any time | Low or no cost | Eligibility depends on your state and current monthly income. |
If you have a health savings account (HSA), you can use it tax-free to pay COBRA premiums, and health insurance premiums while you’re receiving unemployment benefits.
Unemployment benefits: what to expect
- Who pays: each state runs its own program, so weekly amounts, waiting weeks and how long benefits last vary. Many states pay up to 26 weeks; some pay fewer.
- Eligibility: you generally qualify if you lost your job through no fault of your own and earned enough in the past year or so. People fired for misconduct or who quit without good cause are often denied, but the state decides case by case, so apply if you’re unsure.
- Severance: in some states, severance or vacation payouts can delay or reduce benefits. Report them when you file.
- Taxes: unemployment is taxable federal income, reported on Form 1099-G. Some states tax it too.
Your 401(k) when you leave a job
| Choice | Taxes now? | Best for |
|---|---|---|
| Leave it in your old plan | No | Plans with low fees and good funds (many plans let you stay if the balance is above a set amount). |
| Direct rollover to an IRA | No | More investment choices and one place to manage your money. |
| Roll into your next employer’s plan | No | Keeping everything in one workplace account. |
| Cash out | Yes: income tax, plus a 10% additional tax if you’re under 59½ (unless an exception applies) | Last resort. Plans withhold 20% for federal tax on a cash-out. |
If you left your job in or after the year you turned 55, withdrawals from that employer’s plan avoid the 10% additional tax. If you had a 401(k) loan, the plan may subtract the unpaid balance from your account (a loan offset). You can avoid tax on that amount by putting the same sum into an IRA or another plan by your tax-filing deadline, including extensions, for the year it happens.
Which bills to pay first
When money is tight, cover the things that keep you housed, healthy and able to work: rent or mortgage, utilities, food, health coverage, and car payments and insurance if you need the car for work or job hunting. Then pay at least the minimum on credit cards and other loans. Call before you fall behind: a hardship plan or a skipped payment arranged in advance does far less damage than a 30-day late mark on your credit report. If you’re already behind, read what happens if you don’t pay a loan and how to prioritize debt repayments.
Frequently asked questions
How long do I have to sign up for COBRA?
At least 60 days from the date you receive your election notice. If you elect within that window and pay the premiums, coverage is restored back to the day your job-based coverage ended, so you won’t have a gap.
Is severance pay taxable?
Yes. Severance is treated as wages: it’s subject to income tax and Social Security and Medicare taxes, and it appears on your W-2.
Can I get unemployment if I was fired?
Often, yes. Being let go because the job wasn’t a good fit usually doesn’t disqualify you; being fired for misconduct often does. Your state decides each claim, so file and let the state make the call.
Should I use my emergency fund or my 401(k) first?
Use your emergency fund and unemployment benefits first. An early 401(k) withdrawal can cost 25% to 40% of the money in taxes and penalties, and it gives up years of tax-deferred growth.
Sources: U.S. Department of Labor (COBRA fact sheet; unemployment insurance), USA.gov, HealthCare.gov (special enrollment periods), IRS (Topic 418 unemployment compensation, Form W-4V, retirement plan loan FAQs, Publication 969), Equal Employment Opportunity Commission (Older Workers Benefit Protection Act), Federal Student Aid. Checked November 2026. This guide is educational and isn’t legal, tax or financial advice.
Related: All life event guides, How to build an emergency fund, Student loan debt guide, How to save money.