Two weeks ago, I wrote a post
about furloughs. Since that time, I have researched this topic some more and
prepared slides for a webinar
about furloughs sponsored by the Association for Financial Counseling and
Planning Education (AFCPE).
Below are six additional things to know about furloughs
that were not included in my previous post:
¨
Benefits May
Continue- Look for guidance from your
employer about what benefits (e.g., health insurance, life and disability
insurance, and retirement plan contributions) will continue and for how long.
Employer decisions will vary based on factors such as group insurance plan
language, union contracts, and the financial stability of employers.
¨
Conditions Can
Change- Realize that furloughs are an
“act of hope” that a business will survive. Not all do. In addition, many employers
are predicted to be working at a reduced capacity well into 2021. A furlough
today could switch to a permanent layoff later. Many furloughs are being done
now (vs. layoffs) so employers do not have to onboard new workers when economic
conditions improve and so workers can access temporarily expanded unemployment
benefits.
¨
Where You Work
Matters- Contact the unemployment
office in the state where you work if it is in a different state from where you
live. Your employer pays taxes to the state where you work to cover its workers’
unemployment claims.
¨
Health
Insurance Options Exist- Take
advantage of employer insurance continuation for as long as it lasts. After
that, three options for coverage are Medicaid (if eligible), COBRA through the
employer, and Marketplace coverage under the Affordable Care Act. ACA options
are usually cheaper, especially if you qualify for subsidies with a reduced
income.
¨
Tax Liability
Will Change- Complete a new Form W-4
(for a reduced income) and take advantage of income-based tax credits (e.g.,
earned income tax credit) for 2020 and set aside (or have withheld) taxes on
unemployment benefits.
¨
“Upskilling” is
Highly Recommended- Use new found
free time to prepare yourself for re-employment with your current employer or
elsewhere. Focus on gaps in your skill set and making yourself as marketable as
possible.
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