U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Work and Employment > Unemployment
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
 
Old 01-26-2016, 02:25 PM
 
1 posts, read 1,296 times
Reputation: 11

Advertisements

Hi everyone!

I was laid off by my company in NYC on January 8th with a 4 month severance package (paid biweekly starting immediately) and there are a few questions that I would like to be answered.

1. Should I apply for unemployment benefits the week AFTER my severance runs out?
2. My former employer said I could qualify for FICA taxes exemptions on my severance payments as long as I apply for unemployment benefits now (even if I am denied the benefits). However my understanding is that in NYS I am not eligible for unemployment benefits until my severance runs out and I should not be applying until then to prevent any confusion.
3. Once I am on unemployment benefits - am I eligible for medicaid?
4. I am considering doing some pro-bono project based work to help me decide on the next line of employment. Would that in any way interfere with my eligibility for unemployment benefits (post severance of course).

Thank you!
Quick reply to this message

 
Old 01-26-2016, 03:11 PM
 
11,306 posts, read 16,882,711 times
Reputation: 2027
The severance stuff in NY is touchy, and I'm not going there, but Ariadne22 knows it a lot better than I do, and I think you're employer is off base about FICA, but again, not my strong suit.


Quote:
Originally Posted by LYGNYC View Post
3. Once I am on unemployment benefits - am I eligible for medicaid?
This I know. Medicaid eligibility is a function of your income at the time you apply. Because of the biweekly severance, you may not be eligible, and if your UI benefit is too high, you still might be ineligible, and there are issues with marital status and dependents. The point being, you just keep applying and if rejected, apply again as circumstances change in a favorable direction.


Quote:
Originally Posted by LYGNYC View Post
4. I am considering doing some pro-bono project based work to help me decide on the next line of employment. Would that in any way interfere with my eligibility for unemployment benefits (post severance of course).
Do NOT even think about doing this. The questions you ask sort of prove that you aren't smart enough to pull this off. in UI, work is work even when it's for free, and especially, in NY, where they take seriously "those that join the ranks of the self-employed are not eligible." I suggest you just look for a job that is as good or better than the one your lost, and you save your dreams of being selif-employed until AFTER you draw your last UI check, OR you formally apply to be in NY's self employment assistance program.
Quick reply to this message
 
Old 01-26-2016, 06:08 PM
 
8,768 posts, read 10,335,902 times
Reputation: 13823
Quote:
Originally Posted by LYGNYC View Post
2. My former employer said I could qualify for FICA taxes exemptions on my severance payments as long as I apply for unemployment benefits now (even if I am denied the benefits). However my understanding is that in NYS I am not eligible for unemployment benefits until my severance runs out and I should not be applying until then to prevent any confusion.
In March 2014 the US Supreme Court reversed all the hodge-podge of lower court opinions on severance pay and FICA. Prior tot he ruling, many believed severance pay was not subject to FICA based on IRS exemptions for Supplemental Unemployment Benefits (SUBs). In some Judges eyes, severance pay was SUBs and in others they were not. The SCOTUS ended the debate on that by ruling severance pay is subject to FICA unless set up as a legal IRS exempt Supplemental Unemployment Benefit package by the employer.

Now, before assuming your employer did set this up and is giving you good advice, you'll need to consult with a tax professional who can examine the payments, any documents sent to you on the Trust, and if you otherwise meet state requirements. I strongly urge you to verify with a professional and not rely on your employer because most have no idea what the heck they are talking about and give misleading information just to get you to not be too upset at them. But, in your case, your employer did provide questionable information as SUBs absolutely require that you be approved for unemployment benefits and the trust paying the money must know your paid unemployment weekly benefit amount. If you are denied benefits, you can not be paid from the trust so no SUB exemption would exist.
Quick reply to this message
 
Old 01-26-2016, 06:30 PM
 
Location: Wisconsin
20,795 posts, read 41,440,451 times
Reputation: 14036
Quote:
Originally Posted by LYGNYC View Post
I was laid off by my company in NYC on January 8th with a 4 month severance package (paid biweekly starting immediately) and there are a few questions that I would like to be answered.

1. Should I apply for unemployment benefits the week AFTER my severance runs out?
YES.

Quote:
Originally Posted by LYGNYC View Post
2. My former employer said I could qualify for FICA taxes exemptions on my severance payments as long as I apply for unemployment benefits now (even if I am denied the benefits). However my understanding is that in NYS I am not eligible for unemployment benefits until my severance runs out and I should not be applying until then to prevent any confusion.
FICA taxes (7.65%) of your severance is not enough reason to apply now. If you apply now, you will lose four months of your claim's monetary award because those weekly benefits will be offset by severance. It's a no-brainer. Employer is trying to get you to apply now to plug the drain on its UI reserve account. Don't do it.

The only possible Catch22 by delaying an application is that your benefits will based on earnings Jan.-Dec. 2015, instead of earnings October 1, 2014-September 30, 2015. If you have a good employment history, a different quarter in your base period shouldn't matter, although your LAG (unused earnings for a future claim) will be affected - still not enough reason to forego 17 weeks' benefits, however.

This is a good explanation of the NY law on UE benefits and severance:
Quote:
The change was signed into law by Gov. Andrew Cuomo in March but did not take effect until Wednesday. It prohibits unemployment benefits for anyone receiving severance pay that exceeds the state's maximum weekly unemployment benefit, which is currently $405 [now $420].

The change even applies to people who receive a lump-sum payment from their former employers. Heather Youngman, an attorney with the Tully Rinckey law firm in Syracuse, said the state will deny unemployment benefits for a period of weeks for anyone who receives a lump-sum severance check. The Labor Department uses a formula to convert the lump sum into weeks based on the maximum weekly benefit and the individual's average weekly wage.

The new rules about severance only apply to those who file for unemployment benefits after Jan. 1. They do not impact those who are already claiming benefits.

But the law has a loophole that could allow people to get around the change. White confirmed that people who receive their first (or only) severance check more than 30 days after termination of their employment can collect full unemployment benefits.

Youngman said people should keep that little detail in mind when negotiating their severance package with an employer.

"The penalty seems to be built in if the severance starts within 30 days," she said. "If I were advising a client, I would negotiate a package that starts after 31 days."

Unlike some states, though, New York still allows terminated workers to receive a full 26 weeks of unemployment benefits after their severance pay has run out and they are still without a job, said Chris White, assistant director of communications at the state Department of Labor. This provides claimants with a critical safety net if they are unable to find a job during the weeks they are receiving severance payments, he said.

Terminated workers receiving severance pay no longer eligible for unemployment benefits in New York | syracuse.com
Quote:
Originally Posted by LYGNYC View Post
3. Once I am on unemployment benefits - am I eligible for medicaid?
Depends on your state's criteria based on monthly income and assets. Talk to your Social Services people.

Quote:
Originally Posted by LYGNYC View Post
4. I am considering doing some pro-bono project based work to help me decide on the next line of employment. Would that in any way interfere with my eligibility for unemployment benefits (post severance of course).
Not a good idea. Any unpaid 'work' is deemed 'work' and possible interference with your ability to search for and accept paying W2 work. UE benefits are NOT purposed for unpaid volunteer work.

NY also has a punitive partial benefit calculation which disqualifies you from 25% of your weekly benefit for any day or part of a day you 'work.' You can 'work' as little as an hour, but will be docked the entire day.

Don't do it. You can do pro bono now while on severance - but not once you are collecting benefits.
Quick reply to this message
 
Old 01-26-2016, 08:38 PM
 
Location: Wisconsin
20,795 posts, read 41,440,451 times
Reputation: 14036
Correction to this:
Quote:
Originally Posted by Ariadne22 View Post
If you apply now, you will lose four months of your claim's monetary award because those weekly benefits will be offset by severance.

It's a no-brainer. Employer is trying to get you to apply now to plug the drain on its UI reserve account. Don't do it.
The foregoing is INCORRECT. Severance in NY only DELAYS payment of benefits, it does not offset benefits. So, assuming you are still unemployed after four months, you could begin collecting the 26 weeks - and would have the eight remaining months of your benefit year within which to do so.

There shouldn't be any confusion in NY on this.

Applying now would also improve your LAG and might improve your overall possible monetary award for a second claim should you be unemployed a year from now.
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


 
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:
Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Work and Employment > Unemployment
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top