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If you’re one of the millions of Americans who have quit their job in recent months, you may be eager to move on to whatever is next for you.
Yet because our work and the rest of our lives are often interwoven in a number of important ways, you’ll likely need to take a few steps before you can completely wash your hands of your old job.
Here are some of them:
Figuring out health insurance
Nearly half of Americans get their health insurance through their employer. If you’ve just left your job, you’ll want to figure out how to get new coverage as soon as possible.
Most people who quit will lose their employer-sponsored health insurance at the end of the calendar month, said Laurel Lucia, director of the Health Care Program at the University of California Berkeley’s Center for Labor Research and Education.
If you don’t have another job lined up that will provide health insurance, you may be eligible for Medicaid or a subsidized plan on the Affordable Care Act’s marketplace. Medicaid typically involves no or low monthly premiums, Lucia said. And marketplace plans are the cheapest they’ve ever been for many people, thanks to relief legislation passed in the pandemic.
You can compare your options at Healthcare.gov.
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The Consolidated Omnibus Budget Reconciliation Act, or COBRA, allows people who work at companies with 20 or more employees to pay to continue their workplace insurance plan for certain periods of time. The option is pricey – $600 a month, on average – because you’re now shouldering the cost of the entire plan. (And although the latest stimulus package allows people six months of free COBRA coverage, you wouldn’t be eligible for that subsidy if you voluntarily left your job.)
Even if you plan to start a new job soon with new insurance, these options may be worth exploring if there’s going to be any gap in your coverage .
“This can help people to continue to access the health care they need and avoid big bills if they have a lapse in coverage and use services during that time,” Lucia said.
And retirement savings
Many people are also saving for their retirement through their job. Once you’ve quit, if you’ve had access to a 401(k) plan, you’ll need to decide what to do with that account.
“Which one you choose is extremely important, regardless of whether you are planning to move to another job or take time off,” said Rita Assaf, vice president of retirement leadership at Fidelity.
You may not want to do anything. Most employers allow you to keep your plan with them after you leave, Assaf said. (However, if you have less than $5,000 in the account, the money may be sent to an individual retirement account for you, she added.)
Although your money will continue to grow, you won’t be able to continue contributing to it. And you may be limited in how much you can take as a loan or withdraw from the account, Assaf said.
Another option is to roll over the account into an individual retirement account, which can be opened at a bank or brokerage firm. This would allow you to continue saving. You’d also be able to withdraw money from this account if you’re under 59½ without any penalties, she added, if you use it for a first-time home purchase or higher education expenses.
“Make sure to research fees and expenses when choosing an IRA provider, if you do, though, as they can really vary,” Assaf said.
If you’re hopping to another job right away, you may have the option to roll your old 401(k) plan into a new one. Having just one savings retirement account may feel more manageable.
“It’s important to note that not all employers will accept a rollover from a previous employer’s plan, so you should check with your new employer before making any decisions,” Assaf said.
What you don’t want to do, if at all possible, is to cash out the account, she said. You’ll likely be dinged with taxes and penalties, not to mention be risking your financial security when you leave work for good.
