Topic guide · updated 2026-07-31
Layoff money: severance, COBRA, notice and runway
The money questions a layoff triggers, in the order they arrive: what severance is worth after tax, what health coverage costs, how much notice the law required, when the last paycheck is due, and how long the whole package lasts.
A layoff arrives as a stack of decisions with deadlines attached, most of them financial and several of them irreversible. The severance agreement has a signing window. COBRA has an election window. Unemployment has a filing date that affects which wages count.
This cluster covers each piece with the figure or rule that governs it, and links to the calculator that does the arithmetic. None of it is legal advice — where a question turns on the terms of an agreement rather than a published rule, the honest answer is that an employment attorney should read it.
Severance is taxed as supplemental wages
When severance is paid separately from regular wages, employers commonly withhold federal income tax at a flat 22%, rising to 37% on supplemental wages above $1 million for the year, plus Social Security up to the annual wage base and uncapped Medicare. That withholding is a prepayment, not the final tax: if the flat rate exceeds your actual marginal rate, the difference returns as a refund when you file.
COBRA costs what the coverage actually costs
A plan may charge up to 102% of the full premium — the employer's share included — which is why the figure shocks people used to seeing only a payroll deduction. Box 12 code DD on your W-2 reports that full annual cost, which makes it the best starting point for an estimate. The election period cannot end before 60 days after the later of coverage loss or the COBRA notice.
Notice rights come from WARN and its state counterparts
The federal WARN Act requires 60 days' advance notice from employers of 100 or more for qualifying plant closings and mass layoffs. Sixteen jurisdictions add their own law, several with longer periods — 90 days in New York, New Jersey, Maine and Nebraska — and a couple mandate severance in defined circumstances. Employers must satisfy both layers, so the longer notice effectively governs.
The last paycheck has its own deadline
State law, not federal law, sets when final wages are due, and the deadline frequently differs depending on whether the employer ended the job or the employee resigned. Some states require payment immediately at termination; others allow the next regular payday. A handful also require accrued vacation to be paid out. Where a state's rule could not be verified from an official source, this site says so rather than guessing.
Tools in this topic
Every calculator and explainer in this cluster, each built on verified figures with its official source linked.
Severance Pay
Estimate what a severance package is worth before and after tax. Enter weekly pay, years of service, and the employer’s weeks-per-year formula to see the gross amount, the 22% federal supplemental withholding, Social Security and Medicare, and the net that actually lands in your account.
COBRA Cost
Estimate what continuing your employer health plan under COBRA would cost. Plans may charge up to 102% of the full premium, so this starts from Box 12 code DD on your W-2 — the total cost of your coverage — and shows the monthly premium and the full-period total.
Runway Planner
Put the whole layoff picture on one timeline: severance after withholding, unemployment benefits for your state, COBRA premiums, and monthly expenses. The planner shows how many months the money covers, when each source runs out, and exports the deadlines to your calendar.
WARN Notice
How much advance notice a mass layoff or plant closing requires: the federal WARN Act’s 60-day rule and employer thresholds, plus every state that adds its own notice law — with the notice period, what each law covers, and the statute it comes from.
Final Paycheck
When does a last paycheck have to arrive? Pick your state and whether you were let go or resigned to see that state’s own deadline, whether accrued vacation must be paid out, and the statute it comes from — an estimate of timing, with the source linked.
Signing Windows
Workers 40 and older get statutory time to consider a severance agreement waiving age-discrimination claims: 21 days individually, 45 days in a group layoff, plus 7 days to revoke after signing. Enter the date the offer arrived to map those windows and export them to a calendar.
WARN Back Pay
If a mass layoff gave less notice than the law required, WARN provides back pay and benefits for each day of the shortfall, up to the notice period. Estimate the gap using the federal 60-day rule and your state’s own period, whichever is longer.
Severance vs UI
Some states ignore severance entirely when you claim unemployment; others reduce or delay benefits for the weeks it covers. Pick your state to see its agency’s own published rule, quoted with the source, and how every verified state groups on the question.
Guides
Key terms
Frequently asked questions
That depends on after-tax severance, your state's weekly benefit and duration, whether the state offsets benefits against severance, and your monthly costs including health coverage. The Layoff Runway Planner puts all four on one timeline and reports months of runway.
Official sources for this topic
Every figure and rule referenced above is published by one of these agencies, and each of them — not this site — determines what is actually paid.
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