The 3 moves to make just after you’ve been laid off

As the pandemic wears on, unemployment digs deeper into the economy.

Since mid-March, about half of all households in the U.S. have experienced a loss of employment income, says Mark Hamrick, Bankrate.com’s senior economic analyst.

If it happens to you, don’t wait for the shock to wear off. While it’s painful to lose your job, it’s best to spring into action immediately.

“You want to make sure you [retain] all the benefits you’re losing,” said Andrew Rosen, a certified financial planner and president at Diversified Lifelong Advisors in West Chester, Pennsylvania. “Find a way to regain them to be in line with your financial goals and protections.”

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That means itemizing and replacing everything, from health insurance to any company equipment, such as a cellphone or laptop that you will likely have to give up. If your list seems overwhelming, break it down and do one thing a day.

Don’t forget about seemingly back-burner issues, such as your 401(k). “You’re generally best served by consolidating [your retirement account] to an IRA somewhere,” Rosen said.

It’s likely you’ll also lose group disability and life insurance. Scout whether you need to find your own coverage for these.

Old advice that still holds true: Get your resume in top-notch condition so you can start applying to jobs ASAP. 

Here are three things to put on your list.

Find out when your health insurance ends. If your employer will continue subsidizing your premiums for a period, great. Just make sure you don’t lose coverage. 

You can continue your medical care through COBRA, the Consolidated Omnibus Budget Reconciliation Act.

You’ll pay a price for keeping that, though. First, it’s available only to those who got their coverage while working at companies with 20 or more employees. So it’s not an option for freelancers, anyone who’s self-employed, those currently uninsured or those who worked for a smaller company.

COBRA is expensive — generally four to six times higher than the amount laid-off workers paid toward their insurance while employed. In addition to your monthly premium you also pay your employer’s portion as well as 2% administrative fee.

Because of a recent rule change, the original time frame — 60 days — to decide if you want to elect coverage under COBRA has been extended. If you were laid off after March 1, the clock on making a decision doesn’t run out until the time when the pandemic is declared over.

Plans obtained through the federal Health Insurance Marketplace established by Obamacare, or state Marketplaces, may be more affordable, and you can choose from less expensive bronze and silver tier plans all the way up through pricey gold and platinum. For lower premiums, you’ll have a higher deductible.

Another option to consider is a short-term health plan, which comes with a lot of conditions. This coverage is not required to comply with Obamacare regulations, so these plans usually do not cover preventive care, maternity care, retail prescription drugs or preexisting medical conditions. The plans may have exclusions that bar you from coverage if you’re injured in a sports-related accident, among other situations. The end of a short-term health plan does not qualify you to sign up for Obamacare-compliant insurance, once annual open enrollment is over.

For the last year, Suzanne Truong Hoyer, 39, and her husband have been living on her salary.

Hoyer, an IT analyst in management who lives in Unionville, Connecticut, recommends going through your day to see what you can cut back on, whether meals out or online shopping.

Hoyer joined a local Buy Nothing group on Facebook as way to save money. A free backyard playset saved her family about $1,200. They spent about $75 to buy wood stain and replace a couple of pieces of wood.

If you have an emergency fund, stretch it as long as possible. If you’ve got three to six months’ expenses saved up, it’s helpful to make it last nine to 12 months. “Hopefully, it doesn’t take you longer than that to get a job,” Rosen said.

Homeowners may be able to apply for a home equity line of credit.

“It’s a good fallback position,” Rosen says. “Remember, you don’t have to use it just because you have it.”

But having a HELOC could put you in a stronger position, allowing you access to cash at a lower interest rate than you’d pay on a credit card balance.

The average interest rate on a HELOC is now 4.76%, according to Bankrate.com. In comparison, credit card rates are around 16.04%, while personal loans can range from 5% to 36%.

Depending on the amount of equity you have in your home, “you can typically get 20% to 50% of the equity as a line of credit,” Rosen said. 

Banks generally require a homeowner have 15% to 20% equity in the home to qualify for a HELOC, and it is also getting harder to find lenders. In May, Wells Fargo and JPMorgan Chase, two large mortgage lenders, halted applications for HELOCs. There’s also no guarantee the lender won’t reduce the amount of credit available to you or freeze it altogether. 

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