Surviving a sudden job loss

If the country's economic malaise leaves you out of a job, here's the first thing to remember: Stay calm.

That's because once you know you'll be out of work, there are several steps you can take to help you 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 Assn. 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."

Here's what you do:

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, said Laura Moscowitz, staff attorney with the National Employment Law Project in Oakland. (You're not, however, entitled to be compensated for unused sick days.)

Some companies will give you the option to take your 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.

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 websites 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.

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