What Happens to Your Benefits the Day You're Laid Off

The day a layoff happens, the most urgent practical question for most people isn't the severance number, it's what happens to health coverage, and how fast.

Employer-sponsored health insurance typically ends either on your last day or at the end of that month, depending on the specific plan, not the moment you're notified. Some severance packages include a window of continued employer-paid coverage on top of that, often a stated number of months, which is worth confirming explicitly rather than assuming it's included.

Once employer-paid coverage ends, COBRA becomes the relevant option for most people. COBRA lets you keep your exact same employer plan, but you generally pay the full premium yourself, including the portion your employer used to cover, plus a small administrative fee. You typically have 60 days from receiving your COBRA election notice to decide whether to enroll, and coverage can apply retroactively to your last day if you elect within that window, so a brief gap before deciding doesn't necessarily mean a gap in actual coverage.

Retirement accounts work differently and on a different clock. A 401(k) doesn't disappear or get forfeited because you were laid off, the vested portion is yours regardless. What does matter is any unvested employer match you may lose, and the various rollover options for the vested balance once you're no longer an active employee at that company.

Unused, accrued vacation time is its own separate question, and state law genuinely varies here, some states require it to be paid out as wages, others leave it to company policy. This is one of the few areas in this list where checking your specific state's rule directly is worth doing, rather than assuming a national standard applies.