Leaving Your Job? Here’s What to Do

What to do when you leave your job

Leaving a job — voluntarily or otherwise — can be chaotic. And amidst the chaos there are things to consider that you probably don’t think of at any other time. Here are the basics on what to do when you leave your job.

File for unemployment, if applicable

Applying for unemployment should be your first stop if you’re leaving through no fault of your own. You can probably do so online. (This site can help you find where to file for unemployment.) In some cases, disaster unemployment insurance may also be available.

Don’t wait to file, as it can take time to be approved, and you may need to go through an appeals process. In some circles there’s still a stigma about applying for unemployment insurance, but there’s no reason for that. The money usually comes from a tax that your employer pays. That’s what it’s there for.

Get insurance coverage

If you had health insurance coverage at your job, you’ll be issued a Certification of Prior Creditable Coverage by your former insurance plan. Hang on to that in case a new health plan or employer needs to see it, because it may help you get better rates.

Leaving a job is generally considered a qualifying event, so you if you have a spouse with insurance benefits, you should be able to get on their policy. If you worked for a company with 20 or more employees that offered a group plan, you should be offered COBRA. That’s a temporary extension of health coverage, but you’ll probably have to pay 102 percent of the cost of the plan to get it. You have 60 days to decide whether to elect COBRA continuation coverage, so at the very least, don’t decline it until that time is up.

You may also be able to get on a private plan, or be eligible for a state sponsored health insurance plan. At the very least, look into catastrophic coverage. (The only time I’ve ever needed surgery so far was when I was unemployed. That would have been a huge setback if I hadn’t been able to get on a catastrophic plan.)

Don’t forget about life insurance either, if your only plan was through your employer. If you need it, you should be able to get a private policy.

Use your flexible spending

If you had a flexible spending account, thanks to the Uniform Coverage Rule now’s the time to file all those claims you hadn’t gotten to yet — even if they’re more than you’ve contributed to date.

What does that mean? Suppose you’d elected to contribute $1000 to your flexible spending plan, but you got laid off on January 31st. You would have only contributed $83.33 to your plan by then, but you’re still allowed to be reimbursed for the full $1000 if you incurred those expenses before leaving your job. So submit all of the eligible expenses you’ve incurred to date.

On the other hand, flexible spending is a “use it or lose it” type plan, so if you’ve contributed more than you incurred, you’re out of luck. Still, go through your receipts and get reimbursed for as much as possible.

Take care of your 401k

If you had a 401k account, you generally have three choices on what to do with it when you leave:

  1. You can probably leave the money where it is
  2. You can roll it over to an IRA
  3. You can take it out and pay a ton of taxes on it

Let me just say, no matter how tempted you are, don’t do number 3! Spending it is a bad idea, for so many reasons. Roll your 401k over to an IRA instead (unless your 401k offers absolutely fabulous options, in which case you might consider leaving it there. See What to Do With a 401K When You Leave Your Job for details on how and why it’s a good idea to roll that money over. (Avoiding penalties is just one good reason.) If you’re actually retiring, you’ll want to look into requirements for using the money in your 401k.

Take care of yourself

Finally, take care of yourself. Whether you’ve been laid off, are leaving to start a small business of your own, are taking a new job, or retiring, change is always at least a little bit stressful. Take the time to exercise, get plenty of sleep, and eat well.