The realization that unemployment day is fast approaching, makes it very difficult to focus on your “to-do” list. There are tasks to be completed and questions you will need answers to. It’s hard to know exactly where to start. Before the sun rises on your final day - final pay, take a good look at some of the things that will go on with your last pay check. These items include payroll deductions, retirement accounts and health insurance. You definitely do not want any surprises with your final pay check.
First, verify how and when you’ll receive your final check. There is nothing worse than expecting the check to hit the bank on a certain day to pay the mortgage, only to find out that your check is “in the mail”. This would be particularly stressful if it’s your very last paycheck. Company policy and state law may govern how and when you will receive your final pay check.
Contact your payroll department to find out the company policy on issuing final paychecks. Even if you have always been paid by direct deposit, some companies will issue a “live” check mailed to your address on file for your final wages. State laws may govern when your check will be issued. This may be particularly stressful if your last day is the 2nd and the next check date is not until the 15th. Some states will require an employer to issue a final check within a certain number of days after separation. Some states allow the employer to wait until the next available check date to issue a final check. Find out the laws in your state for issuing final paychecks.
Even with direct deposit, hopefully, you have kept Human Resources updated with any address changes. Continue to report any address changes to the Human Resources Department even after you are separated from the company. They will need an address to mail any vital information including your W-2. If you think you may move around a bit before the end of the year, wait to report any changes until October or November.
You may also have other deductions coming from your check. If your deductions include any liens or child support payments, etc…, be sure to contact the appropriate agency to let them know that there will no longer be a payroll deduction and why. While this will not erase what you owe; communicating now will save you some stress later. Your creditors will let you know what your options are for continuing payments. For example, if you owe the IRS, you may be able to negotiate an amendment to your payment amount because of your lack of employment. This is no time to be embarrassed, you’re not alone. Thousands of others will be making these exact same calls.
What about your leave benefits? This can provide some much needed “extra” cash. Check with the Payroll Department or look in your company’s policy manual to find out what happens to your accrued leave. Some companies will pay out some or all of your earned (accrued) leave (annual, sick, or compensation) upon separation. Ask when and how the money will be disbursed. Will the money be lumped in with your regular pay or will it be a separate check? If your company allows you to use leave “in the hole” (leave you have not earned yet), make sure you ask if this will be deducted from your final check because chances are it will.
Next, consider your employer held retirement or investment savings. If you have a financial broker or accountant (which many of us do not), you can probably get advice on what to do with the savings in these accounts. If you don’t have anyone to supply financial information – consider talking to customer service at your bank. They should be able to present options to you. For example, if you were to leave for another job, you may be able to rollover the money into another retirement account.
If there isn’t a job in the immediate future, you need to consider how to handle your retirement and investment savings. Ask your employer if you have the option of leaving the money sitting where it is. Use the Internet to research other available options for investing the money. Keep in mind that if you withdraw money from a retirement account before actual retirement, you could face paying early withdrawal “penalties”.
Finally, what about the rest of your employee benefits? Do you have health insurance through your employer? Chances are close to 100% that health care coverage will end shortly after you are voluntarily or involuntarily separated from your employer. The Consolidated Omnibus Budget Reconciliation Act (COBRA) can provide health benefits through an employer (using a group health plan with 20 or more employees) for a limited amount of time. You will probably need to pay the entire premium without employer contribution. Keep in mind that while health insurance is not cheap, one serious illness or even a minor accident can wipe out all of your savings. Check with your employer to find out about COBRA benefits and your eligibility. The important questions to ask include coverage period, application deadlines, etc. You don’t want to miss out on an important opportunity because you didn’t ask.
If you have a bit of time before you’re actually separated, use your health and dental coverage, even if it’s just for a check up. It is important to use your coverage while you’re still in a co-pay situation. It’s easier to pay a $15 co-payment for a check up now, then $500 for the same kind of check up later.
This is also a good time to talk to the doctor about your looming economic situation. Find out about their billing and fees for the uninsured. It’s possible that they may have some suggestions on health care options. Now is definitely not the time to be shy. Now is the time to ask as many questions as you can, to gather all the information that you can. Many doctors, especially pediatricians, are very understanding when their patients fall on hard times. Some will occasionally be able to provide medicine “samples” in case you can not afford the full prescriptions.
Explore your health insurance options. There are companies that offer heath insurance at individual and “group” rates. Browse the Internet for companies offering this type of policy. Even major insurance carriers such as Kaiser Permanente and Blue Cross/Blue Shield offer medical coverage directly to individuals and families. Compare prices between those and other insurance companies you may find.
There is so much information to research and digest when you’re facing your final day - final pay. It can all be very overwhelming. Organizing your thoughts is the first step in gaining and keeping it all under control. Make a checklist of all the information that you need to gather. Be sure to include not only the action item but who you spoke to, the action required, follow up dates, etc. While nothing can make being unemployment a great situation, by organizing your thoughts, your transition period from employed to unemployed will be a little more manageable and hopefully a little less stressful.
If you have other ideas or suggestions to share with our readers, I would love to hear them. Please feel free to post on our forum or e-mail me.