Coronavirus Unemployment Benefits: What Workers Need to Know

On top of its lethality to thousands of people this year, the COVID-19 coronavirus is the biggest single job killer in living memory: Nearly 10 million Americans filed for unemployment benefits in the last two weeks of March, far eclipsing the worst numbers we saw during the financial crisis of 2008-2009.

Against that backdrop, Congress passed the CARES Act, a $2.2 trillion rescue package signed into law by President Trump on March 27th. Among its many provisions is a new program called Pandemic Emergency Unemployment Assistance (PEUA). This program is designed to provide direct relief to newly unemployed or furloughed workers who have lost their livelihoods due to the coronavirus.

The key feature of the Pandemic Unemployment Assistance program is a $600 per week plus-up of state unemployment benefits for up to 39 weeks.

The Pandemic Emergency Unemployment Compensation (PEUC) program allows those who have exhausted benefits under regular unemployment compensation or other programs to receive up to 13 weeks of additional benefits.

Eligibility

The Pandemic Emergency Unemployment Assistance program also expands unemployment insurance benefits to large groups of people who normally do not qualify, including gig economy workers, freelancers and self-employed individuals.

If you’re out of work because you’re sick or quarantined, or because your child’s day care or school shut down, you can still get a federal benefit, even if your state doesn’t provide it.

Applicants must demonstrate that they are otherwise able to work and available for work within the meaning of applicable state law, except that they are unemployed, partially unemployed, or unable or unavailable to work because of COVID-19 related reasons.

You are not eligible if for unemployment benefits if you are receiving paid sick leave or other paid leave benefits.  

Details vary by state.

Since unemployment insurance is run at the state level, details vary a great deal from state to state. For example, some states have much more generous caps on unemployment benefits payments than others, from just $235 per week in Mississippi up to $823 per month in Massachusetts.

However, the federal Pandemic Emergency Unemployment Assistance program will add $600 to each state’s weekly cap through the end of July. So the maximum benefit available in Mississippi from January 27th through July 31st, 2020 will be $835 per week, while Massachusetts workers may receive up to $1,423 per week.

Note that unemployment compensation is driven by the location of the job, not the worker. If you live in one state and work in another, apply in the state where you work, not where you live.

PEUA benefits are payable for periods of unemployment or partial unemployment beginning January 27th. So if you experienced a loss of employment, including self-employment, due to the coronavirus since that time, you may be able to receive a retroactive federal benefit.

Federal benefits will end as of July 31st.

Waiting periods eliminated in some states.

Some states normally impose a one-week waiting period before workers can qualify for benefits. However, the CARES Act encourages state administrators to waive that requirement. A number of states have already done so.

Job search requirements are eased.

Under normal circumstances, unemployment benefit recipients must show administrators that they are available to work and have been actively seeking employment.

With state and county employment counseling and referral centers and employers shut down, and many people out of work because they are quarantined or have been sick themselves, states are waiving the requirement to actively seek work for the time being.

Expect Delays.

The CARES Act allocated $1 billion to help state unemployment offices staff up to administer the massive onslaught of claims. But it’s still going to take a while for states to catch up. As a result, it may be weeks in some cases before you will actually receive benefits. You should file for benefits as soon as you are unemployed. There is no advantage to waiting. Make sure they've filed a tax return for 2019 or 2018 with bank information so the government can deposit the money directly.

Many state unemployment websites are creaking under the strain of an unprecedented amount of traffic. To make matters worse, phone lines are still jammed. Generally, the best way to receive benefits is to file online.

Click here and select the state where you work from the drop-down menu, for more information. Or see this brief FAQ from the Department of Labor.

Plan on paying taxes.

Unemployment benefits are taxable. If you receive unemployment benefits this year, you will receive a 1099G detailing the amount. That will be taxable income (though if your income is way down this year you may benefit from the higher standard deduction under the Tax Cuts and Jobs Act). For 2020, the standard deduction is $12,400. If you file as a head of household, the standard deduction for 2020 is $18,650. And for married couples filing jointly, the standard deduction is $24,800.