What happens if you lose your income?

0:01- So losing your job is often one of the more stressful things that anyone has to deal with their life. One, we all wanna find purpose in life and find where we fit in. But oftentimes, even more importantly, that loss of income can be a big deal for you and those who are dependent on you.

0:17So what do you think about in that circumstance? So depending on the state you're living in, I'm assuming that we're talking in a United States context. You may have access to unemployment insurance. You will typically qualify if you lost your job for no major fault of your own.

0:33What do I mean by major fault? You could still qualify for unemployment insurance if you even underperformed. And so it was a performance thing. As long as you didn't do some kind of misconduct or you got fired for doing something really, really bad, you might qualify.

0:49And definitely if you just got laid off 'cause your employer had to do some cost cutting or they removed some roles, you are likely to qualify for unemployment insurance in your state. Now the benefits that you get are going to vary from state to state. Most states the benefit is about three to $600 a week and they don't last forever.

1:10Some states like Massachusetts, depending on what your income was way before you lost your job and how many dependents you have, it can actually get close to a thousand dollars or even get a little bit above a thousand dollars. But the amount of benefit you get is based on the income that you had before.

1:27It is definitely not your full income, but it's based on that. And then it caps out after a certain point and it's not forever as I was touching on, some states are closer to about 12 weeks, so give or take three months or so. And some states are closer to 26 weeks, closer to about six months or so.

1:46And even while you're in that time period, they expect you to be looking for a job and they will check in on you to make sure that you are looking for a job. Because this isn't meant to be something forever. This is meant to hold you and your family over while you are hopefully able to transition into your next job.

2:02Now there's other things that you might wanna look at depending on why you lost your job. Sometimes you might lose your job because you're not able to work anymore. Maybe you had an injury that's oftentimes referred to as disability that keeps you from working.

2:17If it's a short-term thing where you have to go through surgery and you have to be outta work for a month, that would be short-term disability. And there's often times short-term disability insurance that either you might pay out of pocket or that your employer will cover.

2:34If it's long-term, then you're talking about long-term disability insurance. That would be something that's over years or maybe for the rest of of your work life. You just can't work anymore. And that's to cover that. And if you've been paying into social security and the benefits vary on how much you've been paying into social security and how long you've been paying into social security, there's also social security disability insurance, SSDI, that is another option.

2:57Now, it's very important to keep in mind, none of these are likely to make you as whole as you were when you had your full income. But they're intended to help you when you're in some of these circumstances. Now, I wouldn't say the last thing to consider, but another important thing to consider because here in the United States, for most people or for many people, your health insurance is tied to your work.

3:21And if you lose your work, what happens to your health insurance, which could be very important for you and your family. Well, one option is if you have a partner, if your spouse has an employer and they cover the family, that could be a good option. That'll probably the first thing to look at.

3:35There's another program called COBRA. The acronym is kind of a, lemme see, I have it written over here. Consolidated Omnibus Budget Reconciliation Act. You can just remember COBRA. But that essentially gives you the right to continue your employer insurance for another 18 months.

3:54But there's a catch. You don't get it for free. You have to pay the full price for that insurance plus a, I think it's a 2% fee. So you're going to have to be paying out of pocket, which is also hard 'cause you just lost your income. You might get some of that unemployment insurance, et cetera.

4:10But that's to at least make sure that you and your family can continue to be insured. Now, if your income drops below a certain threshold, then you might qualify for Medicaid. If you are ready to retire, then you know, and if you're the right age, maybe even Medicare could come into play.

4:31And then last but not least, because the Affordable Care Act, there are subsidized plans on healthcare.gov that you can look at that you could pay out of pocket likely cheaper than your employer COBRA plan that you would've otherwise paid. But they all have trade offs depending on the deductibles and what they might cover.

4:51So it's a tough situation that frankly, though most people do go through at least once in their life. So it's good to keep track of how you hold yourself over. In general, my take on it is, it's great that there's some of these programs, but the best thing that you can have is, have a nest egg control as much of your destiny as you can.

5:12You can't always, none of us can control all of it, but so, you know, try to save up that rainy day funds that you can have. That's what this is for or one of the things that this is for. But above and beyond that, there are definitely government programs and things that you might do, forms of insurance that your employer might do to make sure that you and your family are at least in reasonable shape if you find yourself in this situation.