There is no way to feel good about losing your job, but you might as well take the severance pay to take some of the sting from it. However, before that happens, make sure to ask yourself these important questions.

1. Do I have a right to severance pay? Can the company even refuse to offer me severance pay?

There is no requirement that companies should offer severance pay. However, though it may be voluntary there are situations in which a company may be obliged to pay severance, which are enforceable by law.

a. Written or oral commitments to the employees
Any contracts for the payment of severance, even verbal promises, are binding for your employer.

b. When there is a regular policy of paying severance to workers
If your company has paid severance to individuals in similar situations, they might be obliged to pay severance to other employees as well, so as not to be discriminatory in their practices.

c. You are a federal employee or part of a union
You likely would be subject to formalized plans of paying severance, with relevance as benefits under the Employee Retirement Income Act (ERISA).

2. How much should I expect from my severance pay?

Because the payment of severance is voluntary, it will vary from company to company. Within the United States, it is customary to pay out one or two weeks of pay per year of work with the company; there may be state-mandated base pay.

Your employer is also required at minimum to pay departing employees under the Fair Labor Standards Act (FLSA) for due regular wages and accrued paid time off, such as vacation days. This is separate to the severance package and should not be deducted.

3. Is severance pay taxable?

Yes, the Supreme Court has ruled that severance pay count as taxable wages. Several tax laws apply.

a) Federal income tax depends upon how your severance payments are given. If it is paid as salary continuance, your usual federal income tax withholding rate is applied. If it given as a lump sum payment, you may find it reduced by as much as 25 percent withholding.

b) FICA tax obligations. You must pay 4.2% for Social Security and 1.5% for Medicare.

4. Can I immediately collect unemployment after being laid off?
If you are paid your severance package in lump sum or split payments, you will qualify for unemployment benefits. Salary continuance, however, will disqualify you from collecting unemployment as a measure against double dipping. Check with an employment attorney specializing in severance pay before googling information on what to do.

5. How do I keep my insurance after being laid off?

Perhaps the most urgent worry of employees is finding a way to maintain their insurance policies, because medical bills is the leading cause of bankruptcy in the United States. The Consolidated Omnibus Budget Reconciliation Act, known as COBRA, allows for employees to maintain their insurance policies for up to 18 months, if the termination was not due to gross misconduct.

The downside is that you will need to pay in full the premiums your employer used to pay, but at the company-negotiated group rate that would likely be less expensive than the similar individual policy at the market.