Unemployment benefits

September 11, 2018

Even the most highly-qualified job seekers can experience periods of unemployment. Making sure that you take advantage of all the unemployment resources that are available can mitigate a significant amount of the stress that can accompany the lack of a steady income.

The first and most important thing you can do to make your life easier when you're unemployed is to practice smart financial habits while you still have a job. Maintaining an emergency fund can help you endure spells of underemployment or unemployment without significant financial hardship.

If you find yourself unemployed, the suggestions below might help steer you in the right direction.

Quick checklist

  1. Check if you are eligible for unemployment insurance benefits: depending on your state of residence, this may only apply if you are laid off.

  2. Examine your monthly expenses closely and cut back where possible in order to stretch your savings. Consider sticking rigidly to a tighter budget.

  3. Treat finding work like a full-time job: maintain regular job searching hours, but make sure to allow yourself some time to relax.

  4. Consider going back to school.

  5. Consider finding contract work. If you have special expertise or an in-demand skill you may be able to find temporary work to supplement your savings while you look for the next good opportunity.

  6. Investigate options for health insurance.

  7. Look to see if you qualify for food stamps and other government assistance programs. You should never have to go hungry.

Unemployment insurance

Extended periods without income can be stressful. Thankfully the federal government works with states to offer unemployment insurance. This program provides benefits—in the form of direct financial compensation—to those who have become unemployed “through no fault of their own."

Whether you are unemployed through a fault of your own is a matter determined by your state of residence. In general, unemployment insurance is intended for people who have been laid off due to a shortage of work. In California, however—along with several other states with more liberal unemployment insurance policies—workers who get fired or quit their jobs may file for unemployment, but they'll have to go through a phone interview and a few additional steps. States are responsible for setting all other eligibility requirements for unemployment insurance. Most require that the claimant be both available for work and actively seeking work.

The dollar amount you can expect to claim from unemployment insurance varies by state and is also influenced by your earnings in the past year. The more you earned, the more you can expect to receive in unemployment benefits. In California, the minimum weekly benefit amount is $40, and the maximum is $450. Unemployment benefits are subject to federal income tax. Though there are some exceptions, unemployment insurance can usually be received for up to six months.

Partial unemployment benefits exist for those working part-time. As with full-time employees, their earnings from the past year determine their benefit amount.

To file a claim for unemployment benefits, contact the State Unemployment Insurance agency as soon as you become unemployed. You’ll need to provide them with some information about yourself and your recent employment history. If all goes well, you can expect to receive your first check a few weeks later. You’ll need to continue filing claims every week or two to prove your eligibility. This means you may have to provide proof that you’re actively seeking work.

If you file for unemployment, you may also be required to register with the State Employment Service, which will help you look for work. They can refer you to job opportunities in your field and provide services such as testing and training to help you in your job search.

Health insurance while unemployed

Since many people receive health insurance as a a benefit from their employers, becoming unemployed can cause insurance trouble. Fortunately, if you lose your job you have two reasonable options:

COBRA is a program that allows you to retain your employer-provided insurance plan even after leaving the company. To do so, the program lets you take over payment of the health insurance premium previously covered—or at least subsidized—by your previous employer. This allows you to retain, for up to 18 months, the same health insurance coverage you (and potentially your family) previously enjoyed. However, your premium may be surprisingly expensive; some companies offer generous health insurance plans whose true cost is not apparent to you until you leave and apply for COBRA.

You can also purchase an individual health insurance plan on the public market. Check out the healthcare exchanges set up by the Affordable Care Act (ACA). You can find your state's exchange at healthcare.gov. Since employer plans are often expensive, it might make sense to choose a less-expensive, lower-coverage plan during your unemployment rather than relying on COBRA. If your estimated annual income at the time of your unemployment is below a certain threshold, you may qualify for a subsidized insurance plan through the ACA, which can significantly lower your premium. You may also qualify for Medicaid—a federal program that provides free health coverage for poor and disabled Americans.

Welfare

If you find yourself in a really tough financial situation, the government has a variety of welfare programs designed to help. These programs are aimed at providing assistance in various forms to low-income individuals and families. Unfortunately, not everyone who would like government assistance qualifies. In order to determine eligibility, the government considers the value of your assets, your income, and your number of children. Between federal and state governments, there are many different welfare programs. Here, we’ll take a look at a few of the largest.

The Temporary Assistance for Needy Families (TANF) program is what people often refer to to when they use the term, "welfare" (though "welfare" can also apply to any of the programs listed in this article.) TANF is the largest program that offers direct monetary help to those in need. The average three-person family in the program received $429 per month in 2015, though the amount varies from state to state. TANF requires that recipients get a job within two years, and that they receive aid for no more than five years.

The Supplemental Nutrition Assistance Program (SNAP) provides people with food vouchers, commonly known as food stamps. It reaches close to $50 million people, providing an average of $133 in vouchers to each recipient each month. Some additional programs to help people pay for food include: the Special Supplemental Food Program for Women, Infants, and Children, and the Child Nutrition Program, which subsidizes school lunches for 30 million children.

The Housing Choice Voucher Program, also known as Section 8, subsidizes rent on qualifying living places for low-income families. The program expects that a family will spend 30% of its income on housing, and covers the rest of the rent. Housing options are limited by the cost of rent, but are broader than just project-based housing—meaning Section 8 vouchers can apply towards privately rented apartments. The vouchers can also be applied towards purchasing a home.

The Earned Income Tax Credit (EITC) is a tax credit worth worth around $2,000 for families with at least one child. The income cut-off is higher than the cutoff for TANF—a family’s income must be below $51,567 per year to qualify for the EITC.

Medicaid is another important welfare program. To read more on that, check out the section on health insurance.

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