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Updated on Friday, May 29, 2020
As the coronavirus pandemic continues to shutter businesses nationwide, millions of workers are facing layoffs and furloughs. In response, the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act made the following changes to unemployment insurance:
- All unemployment insurance recipients will receive an extra $600 of Federal Pandemic Unemployment Compensation per week through July 31, 2020.
- All states must pay out 13 additional weeks of federally funded assistance once people use up their regular state benefits. In states with high unemployment rates, people will receive more additional weeks.
- Eligibility is expanded to include furloughed workers, self-employed workers, people looking for part-time work, gig workers, people without sufficient work history and people who cannot get to work or voluntarily quit their jobs due to reasons related to COVID-19.
If you’re one of the millions finding themselves without a paycheck amid the pandemic, here’s what else you need to know about unemployment insurance, including who is eligible and how to apply.
- What are unemployment insurance benefits?
- Who is eligible for unemployment benefits?
- What will disqualify you from unemployment insurance?
- How the CARES Act impacts unemployment insurance benefits
- How to apply for unemployment benefits
What are unemployment insurance benefits?
Similar to how you have health insurance to cover unexpected medical expenses or car insurance to insulate you from accidental auto costs, your income has a safety net, too.
Unemployment insurance is a joint federal-state program offered by the U.S. Department of Labor that doles out cash payments to eligible workers. The program was established in 1935 and is intended to replace a portion of wages for workers who have lost their job through no fault of their own, as long as they are able and willing to work. Unemployment benefits are funded by taxes on employers.
While each state can determine its own parameters for the unemployment insurance program — with the dollar amount of benefits, the duration of benefits and the eligibility of benefits differing from state to state — they still must meet certain federal guidelines. Typically, eligibility for unemployment insurance entails meeting the following requirements:
- Must meet work and wage requirements of your state. You must meet your state’s requirements for time worked and wages earned during an established period of time, which is called the “base period.”
- Must be unemployed through no fault of your own. This may include losing your job due to layoffs or lack of work.
- Must meet additional state requirements. You can find these requirements through the U.S. Department of Labor’s Unemployment Insurance Service Locator.
How much money do you get from unemployment benefits?
Unemployment insurance offers temporary financial relief to eligible workers, but the amount of that financial relief and its cadence varies widely from state to state. In many cases, states calculate your benefit amount based on a percentage of your pre-unemployment earnings.
|Maximum Weekly Unemployment Benefits by State|
|State||Weekly Unemployment Benefit Cap (Excluding $600 Supplement)|
|District of Columbia||$444|
|Notes: Average weekly wage as of Q3 2019, including all workers in all industries for both public and private employers.|
While the U.S. Department of Labor reported that the most recent average weekly benefit payment was $372.97 — or usually half of a person’s typical weekly earnings — unemployment benefits vary drastically from one state to the next. Additionally, many states set their own floors and ceilings on how much unemployment benefits can be.
In Alabama, for example, weekly benefits range from a minimum of $45 to a maximum of $275, and are calculated using your base period earnings. Meanwhile, in New York, there is a minimum benefit rate of $104 and a maximum of $504, with benefits calculated from your base period earnings.
How long do unemployment benefits last?
Unemployment benefits do not last forever, and the amount of time you’ll receive benefits is again dependent on the state in which you file your claim. In some cases, states use their own unemployment rate to determine the maximum amount allowable for that benefit year.
For the most part, though, states have set the amount of time that an individual is able to receive unemployment benefits at 26 weeks. Still, that can vary widely from state to state, with some having shorter limits and others longer ones.
Alabama, for example, says it generally allows unemployment benefits to last for 14 to 20 weeks, while New York says your claim lasts one year, during which your full weekly rate can be paid out a total of 26 times.
Are unemployment benefits taxable?
It’s important to note that unemployment benefits are taxable, and are subject to federal and most state income taxes. You must report unemployment benefits as income on your tax return.
You might be required to make estimated quarterly tax payments, or you may elect to have your taxes withheld by the State Unemployment Insurance agency. In fact, experts recommend paying your taxes upfront to avoid any surprises when tax season rolls around, or if you anticipate getting a new job by the end of the year that lands you in a higher tax bracket.
Who is eligible for unemployment benefits?
While eligibility criteria differs from state to state, you are typically eligible for unemployment benefits if you meet the following requirements:
- You are unemployed through no fault of your own. If your company lays you off due to a lack of work available, for example, you should be eligible to receive benefits. If you leave your job voluntarily, on the other hand, you may not be eligible for benefits.
- You meet certain wage and work requirements. Many states require you to have worked for a certain length of time and earned a certain amount in wages from your previous employer before being able to file for unemployment benefits. Those requirements vary significantly from state to state though.
Additionally, states typically require you to take regular action in order to continue receiving benefits. Those actions might include filing weekly claims and answering questions about your willingness to work, active job searches, any earnings you made that week, job offers you might have received or any other requirements requested of you by your state.
What will disqualify you from unemployment insurance?
Unfortunately, many who are unemployed do not qualify for benefits. Typically, you won’t qualify for unemployment benefits if you fall into any of the following camps:
- Gig workers
- Self-employed workers
- Undocumented workers
You may also be denied unemployment insurance if you:
- Left your job voluntarily without good cause.
- Were fired from your job due to misconduct.
- Are not willing and able to work, and are not actively looking for employment.
- Have refused an offer for suitable work.
How the CARES Act impacts unemployment insurance benefits
In response to the pandemic, Congress passed a $2 trillion coronavirus relief package, which includes significant expansions to the country’s unemployment insurance program. As noted above, those expansions include:
- Boosts unemployment benefits. In addition to the weekly unemployment benefits you receive from your state, you’ll receive an additional $600 of federally funded benefits per week. This added payment will be paid out until the end of July.
- Extends the duration of unemployment benefits. The CARES Act tacks on an additional 13 weeks onto the period in which you are eligible to receive unemployment insurance, funded by the federal government.
- Expands the eligibility of unemployment benefits. The CARES Act expands unemployment benefits to people who would otherwise be ineligible, including people who are self-employed, independent contractors and people whose employment has been adversely affected by the COVID-19 crisis. Benefits for those individuals will be doled out for a maximum of 39 weeks, funded by the federal government.
- Lifts the waiting period for receiving benefits. Many states require a one-week waiting period for people who file unemployment claims before they start receiving benefits. The CARES Act lifts that waiting period and offers to pay out the first week of benefits, and your state may choose to pay you immediately after you become unemployed with those federal funds.
How to apply for unemployment benefits
In many cases, you can easily claim your unemployment benefits online, by telephone or in person. Per the U.S. Department of Labor, you should take the following steps to file for unemployment benefits:
1. File a claim in the state where you worked
As soon as you are unemployed, file a claim in the state in which you worked. You can find information on your state unemployment insurance’s office here, where they will direct you on whether to file your claim in person, by phone or online.
With unemployment levels at record highs, you might be instructed to take additional steps when filing. In New York, for example, the day you apply should be based on the first letter of your last name — so if your last name begins with an A, you need to apply on a Monday.
2. Gather necessary information
Be prepared with the information you’ll need to provide, including addresses of your former employer and dates in which you worked there, as well as proof of wages and employment. Other information you should have on hand includes:
- Your Social Security number
- Your driver’s license or motor vehicle ID card number
- Your mailing address
- Your phone number
- Your alien registration card number (if you are not a U.S. citizen)
- The names and addresses of all your employers from the last 18 months
- Your employer registration number from your most recent employer
You will also likely be asked whether you want to receive your benefits via a debit card or direct deposit. You will need to provide your bank’s routing and account numbers if you choose to have your benefits directly deposited.
3. Wait to start receiving benefits
Typically, payments take between two to three weeks from when you first filed a claim to be issued. However, departments are facing unprecedented levels of claims due to the COVID-19 crisis, so you may experience further delays.