As we write this month’s article, we are facing a sea of uncertainty. First and foremost, we understand yours and your loved one’s physical health is of primary concern. However, we wanted to use this article to discuss a few tips and resources to navigate some of the financial uncertainty you or your family may be facing at this time.
If You Lost Your Job
If you have been laid off due to the mandatory business closures in effect because of the Shelter-In-Place order, you should understand that there have been changes to California’s Unemployment Insurance program in response to this. The mandatory one-week waiting period that was required previously before being allowed to file for unemployment benefits has been waived for residents of California. The Employment Development Department (EDD) website provides helpful resources including an estimated benefits calculator and many how-to guides and checklists to help navigate the process of applying for benefits (edd.ca.gov/Unemployment/).
Also, at the time of writing this article, we are still trying to review the details of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). However, it appears that in addition to state unemployment benefits, the CARES Act is potentially offering workers experiencing a period of unemployment $600 additional per week in benefits through July. It is also expanding unemployment benefits to some categories of workers who previously may have been ineligible like contractors and the self-employed. Additionally, under the CARES Act, the IRS will be sending out one-time stimulus payments of up to $1,200 per adult and $500 per eligible child to individuals and families whose incomes fall below certain thresholds regardless of current employment status.
Lastly, if your health insurance was tied to your employer, know your options for maintaining coverage. You may be eligible for COBRA, which essentially allows you to remain on the health insurance plan you had through your employer for a certain period of time (between 18-36 months depending on the qualifying event). However, under COBRA, you are typically responsible for 100% of the premium payments and an administrative fee (including premiums that were previously paid for by your employer). For some, COBRA premiums can be cost-prohibitive. Other options to review and consider could be coverage under a spouse’s health insurance plan (if available) or a plan on the individual marketplace through Covered California. Each option has pros and cons and they also have certain deadlines you must meet to qualify for coverage. It’s important to review your options carefully and make a timely decision in order to maintain continuous coverage.
If You’re Still Employed
If you are still employed, now would be a good time to review your monthly budget. As hard as it may sound, you should look to reduce or eliminate anything that is non-essential and begin building or bolstering your emergency fund. As a general rule of thumb, you should aim to have at least six months of expenses set aside in an emergency fund. However, depending on the type of industry you work in, you may need to look to set aside more in an emergency fund if you feel it could take longer than six months to find a new job.
If possible, continue to maintain a plan to pay down certain types of consumer debts (like credit cards) faster than the minimum required payments. You should continue to try and pay down these types of debts as much as possible while you are able to in the event that you or a spouse experience something unforeseen like a job loss in the future.
Lastly, everyone should be on a heightened alert for scams. These can come in the form of mail, emails, text messages and look like it’s coming from a legitimate source. Always be wary of links in emails or text messages (especially if they are from an unfamiliar or unsolicited source). When in doubt, ask a trusted family member or friend their opinion if you think something seems out of the ordinary.
We wish everyone continued good health and safety during this time.
Gary E. Croxall, CFP®
Registered Principal of LPL
Soren E. Croxall, CFP®, CFA
Registered Representative of LPL
Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. LPL Financial and Croxall Capital Planning do not provide tax or legal advice. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.