Laid Off? Your Money Plan, Day by Day

Quick answer: the 7 deadlines that matter

Most layoff checklists say "file for unemployment" and "look into COBRA". The money is lost on the dates, so here they are. The builder above puts them on your calendar.

The first 3 days: paperwork, final pay and spending

1. Get it in writing. Ask for a separation or layoff letter (it shows you didn't quit or get fired for misconduct, which matters for unemployment), the date each benefit ends, and any severance offer. Download pay stubs, W-2s and benefit statements before your logins stop working.
2. Check your final paycheck and PTO. 9 states require the final paycheck on your last day or within about a day (in some, only once you ask in writing), 15 within a set number of days, and most of the rest by the next regular payday (table below). Whether unused vacation is paid out depends on your state and your employer's written policy.
3. Spend down a health FSA before coverage ends (book appointments, refill prescriptions). An HSA stays yours.
4. Don't sign anything yet. At 40 or older you have at least 21 days to review a severance release by law; younger workers can still ask for time.
5. Freeze extra spending, not essentials. Keep paying housing, utilities, insurance and minimum payments; pause the rest until you know your runway.

Final paycheck and PTO laws by state

There's no federal deadline for a final paycheck; state law sets it. We checked each state's statute or labor department in October 2026; Florida, Georgia and Mississippi have no final-pay law, which we could confirm only from a legal chart. "PTO payout" shows the states where we verified that earned, unused vacation must be paid; elsewhere, check your employer's written policy.

Where a state separates layoffs from firings (Connecticut, New Hampshire), both are shown. Working days skip weekends. Some states set different rules for commissions, seasonal work or employees who quit.

File for unemployment this week

File as soon as you're out of work, even if severance or a vacation payout is coming: benefits generally start from the week you file, and each state decides how that money counts. Most states have a waiting week, the first eligible week, which isn't paid (Texas and New Jersey pay it later in the claim). Some states will backdate a late claim for good cause, but don't count on it. Once approved, you'll request payment every week or two and keep a job-search log. Benefits are federally taxable (IRS Topic 418), and you can have 10% withheld by filing Form W-4V with the state (IRS).

How much you'll get, for how many weeks and how severance affects it differs by state; the unemployment calculator works it out for all 50 states and DC, and the severance pay calculator shows whether your severance postpones benefits.

Your severance offer: don't sign on day one

Severance usually comes in exchange for signing a release of legal claims. At 40 or older, federal law (the Older Workers Benefit Protection Act) gives you at least 21 days to consider it, 45 days when it's part of a group layoff program, along with a list of the job titles and ages of those selected and the ages of those not selected, and 7 days after signing to revoke (EEOC). The days run from the final offer, and a material change restarts them. It can't waive claims that arise after you sign. The deadline in your agreement is the one to watch.

Use the time to ask for more: extra weeks, employer-paid COBRA months, a later end date that lets your 401(k) match or stock vest, or a neutral reference. In a covered mass layoff without 60 days' notice, the federal WARN Act can entitle you to up to 60 days of pay and benefits (DOL). New Jersey requires severance in mass layoffs: one week of pay per full year of service, plus 4 weeks if notice was short (NJ Department of Labor). See what an offer is worth after tax with the severance pay calculator.

Health insurance: COBRA, the Marketplace or Medicaid

• COBRA keeps your exact plan for up to 18 months at up to 102% of the full premium, which often means paying several times what you paid as an employee. You have at least 60 days to elect, coverage can be retroactive to the day it ended once you elect and pay (depending on plan rules), and you get at least 45 days after electing to make the first payment (DOL). Employers with fewer than 20 employees are exempt from federal COBRA, but many states have their own law.
• The Marketplace (HealthCare.gov or your state's exchange) has a special enrollment window from 60 days before to 60 days after your job coverage ends; pick a plan before it ends and coverage can start the first of the next month, with no gap if your job coverage runs to the end of a month (CMS). Unemployment benefits count as income for the premium credit (HealthCare.gov). The extra credits of 2021–2025 expired and Congress hadn't extended them as of mid-October 2026: the House passed a three-year extension (H.R. 1834) in January, and the Senate hadn't acted (HealthCareInsider), so above 400% of the poverty line there's no credit; with a lower income this year, you may pay much less than COBRA.
• Medicaid uses your current monthly income, so a few months with little income can qualify you in states that expanded it. One HealthCare.gov application checks both.
• Don't drop COBRA mid-year by choice expecting to switch: that doesn't open a Marketplace window; open enrollment (Nov 1 – Jan 15 on HealthCare.gov; state exchanges set their own dates) does, as does COBRA running out (HealthCare.gov).
• Your HSA can pay COBRA premiums, and any health insurance premiums while you're receiving unemployment, tax-free (IRS Pub. 969).

Your 401(k), a 401(k) loan, stock options and insurance

You can leave a 401(k) where it is, roll it to an IRA or a new employer's plan, or cash it out (IRS). Cashing out costs the most: 20% is withheld, and before 59½ there's usually a 10% additional tax on top of income tax. Exceptions include the rule of 55 (leaving the job in or after the year you turn 55 lets you take money from that employer's plan without the 10% tax, but not from an IRA) and one emergency withdrawal of up to $1,000 a year (IRS). Your own contributions are always vested; employer money follows the plan's vesting schedule and can be forfeited (IRS).

An unpaid 401(k) loan usually becomes due when you leave. If it isn't repaid, the plan offsets it from your balance and it's taxed as a withdrawal. You can avoid that by putting the same amount into an IRA or new plan by your tax-return due date, including extensions, for the year of the offset, as long as the offset happens within 12 months of leaving (IRC §402(c)(3)(C)). If you left in or after the year you turned 55, the offset isn't hit with the 10% additional tax. Few layoff guides mention it.

Stock options: vested options usually must be exercised within 90 days or 3 months; incentive stock options exercised later lose their tax treatment (IRC §422). Group life insurance can often be converted or kept without a medical exam within about 31 days; group disability ends with the job.

Your runway: how long your money lasts

Add up what you can use (savings, severance after tax, unemployment after tax) and divide by your essential monthly costs, including health insurance. The builder above does it with your state's benefit. Spend in this order: unemployment and severance first, then cash savings, then taxable investments, and retirement accounts last. If the runway is shorter than the 3–6 months a search often takes, cut costs now rather than later; the budget calculator and emergency fund calculator help.

Bills, debts and student loans

• Mortgage: call your servicer before you miss a payment. Forbearance pauses or lowers payments, but the missed amount must be repaid later through a repayment plan, a deferral or a loan modification (CSBS and CFPB); a servicer generally can't start foreclosure until you're more than 120 days behind (CFPB).
• Credit cards: call the issuer right away and ask about a hardship plan; a nonprofit credit counselor can help, and debt-settlement firms that charge upfront fees should be avoided (CFPB). The debt payoff calculator shows which debts to cover first.
• Federal student loans: on RAP or IBR you can ask for a recalculation on your current income (RAP's minimum is $10 a month; IBR, open only if your loans were all made before July 1, 2026, can be $0), and those months count toward forgiveness. An unemployment deferment of up to 3 years, for people receiving unemployment benefits or looking for full-time work, is still available on loans made before July 1, 2027. See the student loan repayment calculator.

Taxes in a layoff year

Severance is taxed as wages and is often withheld at a flat 22% federal rate, which can be too much or too little. Unemployment is fully taxable federally, with only 10% withholding available; most states tax it too, but not California, New Jersey, Pennsylvania, Virginia, Alabama or the states without an income tax on wages. A lower income this year can mean a bigger refund, a larger Marketplace credit and a lower student loan payment. Job-search costs such as résumé services and travel aren't deductible for employees. Unemployment benefits don't count as earnings for Social Security (SSA). The tax refund calculator estimates where you'll land.

Earning while you look

Part-time or gig work is allowed while you claim, but you must report the earnings each week, and most states cut the benefit once earnings pass a set amount. Gig income also brings self-employment tax; the side hustle tax calculator shows how much to set aside.

Help programs

Dial 2-1-1 for local help with rent, utilities and food. SNAP (food stamps) uses your current income; since July 2025, adults 18–64 without dependent children under 14 are generally limited to 3 months of SNAP in 3 years unless they work or train 80 hours a month, with waivers now limited to fewer areas (USDA). Your state's job center (American Job Centers) offers free career help and training.

Common questions

What should I do first after being laid off?

Get your separation letter and benefit end dates, file for unemployment in your first week, and don't sign a severance agreement until you've read it. Then put the COBRA and Marketplace deadlines on your calendar.

Can I get unemployment and severance at the same time?

It depends on the state: some ignore severance, some postpone benefits for the weeks it covers, and some count it only in the week it's paid. File anyway and report it. The severance pay calculator shows your state's rule.

Should I take COBRA or a Marketplace plan?

Compare the monthly cost and your doctors. COBRA keeps your plan but costs the full premium; a Marketplace plan can be much cheaper if your income this year qualifies for a credit. You can decide within the 60-day windows, and COBRA coverage can be retroactive once you elect and pay.

What happens to my 401(k) if I'm laid off?

It stays yours. Your contributions are fully vested; unvested employer money may be forfeited. Leave it, roll it over, or (at a cost) cash it out. Repay or roll over any loan offset by your tax-return due date.

Is unemployment taxable?

Yes, federally, and in most states. You can choose 10% federal withholding when you file.

Do I get paid for unused vacation when I'm laid off?

Only in some states by law (such as California, Colorado, Illinois and Massachusetts); elsewhere it depends on your employer's written policy. See the state table above.

Sources

1. An Employee's Guide to Health Benefits Under COBRA — U.S. Department of Labor, EBSA. Accessed October 16, 2026.
2. Losing job-based coverage (Marketplace special enrollment) — Centers for Medicare & Medicaid Services. Accessed October 16, 2026.
3. COBRA coverage and the Marketplace — HealthCare.gov. Accessed October 16, 2026.
4. What to include as income — HealthCare.gov. Accessed October 16, 2026.
5. H.R. 1834, 119th Congress (three-year extension of enhanced premium tax credits) — Congress.gov. Accessed October 16, 2026.
6. Will you qualify for an ACA subsidy in 2027? — HealthCareInsider. Accessed October 16, 2026. Status of the enhanced premium tax credits.
7. Understanding Waivers of Discrimination Claims in Employee Severance Agreements — U.S. Equal Employment Opportunity Commission. Accessed October 16, 2026.
8. Plant closings and layoffs (WARN) — U.S. Department of Labor. Accessed October 16, 2026.
9. NJ WARN Act notice and mandatory severance (form NJES-997) — New Jersey Department of Labor. Accessed October 16, 2026.
10. Topic no. 418, Unemployment compensation — Internal Revenue Service. Accessed October 16, 2026.
11. Form W-4V, Voluntary Withholding Request — Internal Revenue Service. Accessed October 16, 2026.
12. Publication 969, Health Savings Accounts — Internal Revenue Service. Accessed October 16, 2026.
13. Leaving your job? Options for your retirement plan — Internal Revenue Service. Accessed October 16, 2026.
14. Retirement topics: Exceptions to tax on early distributions — Internal Revenue Service. Accessed October 16, 2026.
15. Retirement topics: Vesting — Internal Revenue Service. Accessed October 16, 2026.
16. 26 U.S. Code § 402(c)(3)(C), Rollover of certain plan loan offset amounts — Legal Information Institute, Cornell Law School. Accessed October 16, 2026.
17. 26 U.S. Code § 422, Incentive stock options — Legal Information Institute, Cornell Law School. Accessed October 16, 2026.
18. Consumer mortgage relief and forbearance guide — Conference of State Bank Supervisors and CFPB. Accessed October 16, 2026.
19. What happens after I complete an application to determine my options to avoid foreclosure? — Consumer Financial Protection Bureau. Accessed October 16, 2026.
20. What should I do if I can't pay my credit card bills? — Consumer Financial Protection Bureau. Accessed October 16, 2026.
21. SNAP: implementing the One Big Beautiful Bill Act's work-requirement changes (memo, Oct 3, 2025) — U.S. Department of Agriculture, Food and Nutrition Service. Accessed October 16, 2026.
22. Do unemployment benefits count as earnings for Social Security? — Social Security Administration. Accessed October 16, 2026.
23. Employment Situation, Table A-12: Unemployed persons by duration of unemployment (September 2026) — U.S. Bureau of Labor Statistics. Accessed October 16, 2026.
24. Job Openings and Labor Turnover, August 2026 — U.S. Bureau of Labor Statistics. Accessed October 16, 2026.
25. Economic Well-Being of U.S. Households in 2025 — Federal Reserve Board. Accessed October 16, 2026.

Final paycheck rules: each state's statute or labor department, checked October 16, 2026 (linked in the table). This is general information, not legal or tax advice.