As the COVID-19 virus continues to spread across the globe, unemployment in the United States has skyrocketed. According to the U.S. Bureau of Labor Statistics, the country experienced its biggest unemployment increase since 1975 this March, with unemployment reaching 4.4%.
If you are one of the millions of people who have been affected by job losses and income reductions, you not only have to deal with the financial challenges, but you also have to deal with the emotional challenges, too.
If you’re struggling with what to do after being laid off, here are three steps you should take right away to minimize the impact on your finances and emotional health.
1. Take advantage of unemployment
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES Act expanded states’ ability to provide unemployment benefits to workers impacted by the COVID-19 pandemic, including workers who aren’t usually covered by unemployment insurance, such as independent contractors.
Filing for unemployment will give you the money you need to keep a roof over your head and food in your pantry. Making sure your basic needs are met can help reduce some of your stress and keep you in a safe living environment.
Filing for unemployment and receiving your first check can take several weeks, so it’s a good idea to apply for unemployment as soon as possible. Contact your state’s unemployment office to begin your claim.
2. Get health insurance
While health insurance can be expensive, it’s an essential expense, especially while the coronavirus virus continues to spread. If you become ill or are in an accident, medical bills could ruin your finances, so health insurance provides necessary protection. And, if you’re dealing with mental health struggles, having health insurance ensures you can get the help you need, including seeing a therapist, psychiatrist, or getting medication.
If you lose your insurance that was provided through your job, you have three main options for coverage:
- Health Insurance Marketplace: If you lose your job, you can qualify for Special Enrollment and sign up for a health insurance plan through Healthcare.gov. If you’ve experienced a drop in household income, you may be eligible for subsidies that make your coverage more affordable. For example, the average premium for health coverage in Florida is $597. But for people who qualify for the advanced premium tax credit — a health insurance subsidy — the average premium is just $98.
- COBRA: If you’re laid off, you have the option of temporarily keeping your employer-offered insurance. However, you’re responsible for paying 100% of the premiums, which can be quite expensive.
- If COBRA is not available to you or you have exhausted your COBRA benefits, get your children covered under the Children’s Health Insurance Program (CHIP). You can also apply for healthcare coverage through Medicaid or the health care exchange programs.
- Short-term plans: Short-term plans tend to have lower premiums than plans offered on the Health Insurance Marketplace, but they have higher deductibles, and they can exclude pre-existing conditions. However, short-term coverage can be an affordable option if you need insurance until you can find a new job.
3. Use other resources.
- Apply for Temporary Assistance for Needy Families (TANF).
- Your children may be eligible for the Free and Reduced Price School Lunch program. Even though schools are closed in many states, the schools are still finding a way to deliver the meals to children in need.
- Apply for the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. If your children are under age five, consider also the Special Supplemental Nutrition Program for Women, Infants and Children (WIC).
4. Take care of your mental health
Many people are struggling with anxiety and depression because of the coronavirus pandemic. If you’re also dealing with a job loss and are stressed about your finances, you may be dealing with even more stress. It’s important to take care of your mental health during this difficult time.
- Contact 2-1-1: The 2-1-1 helpline is available via phone, chat, or text. If you need help, 2-1-1 representatives are available 24/7 and can connect you to local mental health resources.
- National Alliance on Mental Illness Crisis Text Line: If you’re in the middle of a mental health crisis, you can text “NAMI” to 741741 to chat with a trained crisis counselor any time, day or night.
- Telehealth: If you need ongoing support, there are therapists that will talk with you remotely through services like TalkSpace. TalkSpace is currently offering $65 off all plans, and also operates free therapist-led Facebook support groups.
4. Manage your student loans
Thanks to the CARES Act, qualified federal student loans are automatically put on a forbearance right now, meaning you do not have to make payments if you choose. Interest is not accruing on these student loans through September 30, 2020.
FFELP loans held by commercial lenders, Federal Perkins Loans owned by a college and private student loans are not eligible. FFELP loans are eligible for unemployment deferments and the option to enroll in an income-driven repayment plan.
Many private student loan lenders are offering options for pausing payments. Call your lender directly to see what options are available. Call your lender immediately if you become unemployed or your income has changed. Many lenders are willing to work with you.
For high-interest private loans (not federal) that don’t qualify for the payment pause, you could consider refinancing with the help of a cosigner with good credit and steady income. Refinancing student loans could potentially lower your interest rate, which saves money. If you refinance private loans, and opt for a longer payment term, you’ll end up paying more on your loans but could reduce your monthly payment.
Keep in mind anytime you refinance federal loans, you will lose all of the perks that go along with it, including the current payment pause and potential future cancellation for federal student loans. You will also lose the option for income-driven repayment plans, generous deferment options during times of unemployment and economic hardship, a possibility for student loan forgiveness and the ability to discharge loans in death or disability.
If your current private lender is allowing you to postpone or reduce payments due to COVID-19, and you refinance your loan, you of course will lose this benefit as well.
Enlisting a cosigner is a lot to ask, since they are completely responsible for the student loan, and it is reported on their credit report.
Cut all unnecessary expenses. Go through your bills and call each company to see what assistance they could offer you.
Some companies are hiring right now despite the pandemic.
There are many ways to make money from home during the coronavirus crisis. Complete surveys from Survey Junkie or Swagbucks, transcribe audio files on Scrive or find virtual assistant jobs on Flexjobs. These may not pay a lot, but it’s something for a little extra money.
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