Why do we have unemployment benefits?

With the current job market and COVID-19 pandemic, tens of millions of people in the U.S. have filed for unemployment. Fortunately, we have unemployment benefits to help individuals who are unemployed through no fault of their own stay afloat until they can get a new job. They provide cash benefits to those who are eligible.

How do unemployment benefits work?

Generally, unemployment benefits are based on a percentage of what you used to earn ― often half of what you used to earn ― and each state has a maximum amount that is set at the average earnings in that state. Each state calculates benefit payments differently, but they all take into account your past earnings. The benefit money is subject to federal and most state income taxes and must be reported on your income tax return, though you can choose to have up to 10% of the benefit withheld.

Some states also provide an additional benefit if you have dependents, though this amount tends to be small, usually $25 or less per week. If you find a job, you of course will no longer be eligible for unemployment benefits, but if you earn other income while receiving benefits, you will have to report your earnings to the state unemployment agency, which will then decide whether your unemployment benefits should be reduced.

Unemployment benefits usually last for up to 26 weeks during normal times, though some states offer it for a shorter period of time. However, during these rather unusual COVID-19 times, this time period has been extended by 13 weeks so that the total duration is now 39 weeks.

Who is eligible for unemployment benefits?

Each state has its own unemployment insurance benefits guidelines, but to qualify for unemployment benefits, you must be unemployed at no fault of your own (usually due to a lack of available work), meet your state’s work and wage requirements, and meet additional state requirements.

How do I apply for unemployment benefits?

You should contact your state’s unemployment insurance program as soon as possible after becoming unemployed. To apply for unemployment benefits, you need to file a claim with the unemployment insurance program in the state where you worked. If you live in a different state than the one where you worked, or you worked in multiple states, you can contact the state unemployment insurance agency for the state where you now live for information on how to file a claim with other states. Claims may be filed in person, over the phone or online, depending on the state.

When you file a claim, you will be asked for information about things such as your addresses and dates of your former employment, so you should make sure to provide complete and accurate information to avoid delays. It usually takes around two or three weeks after you file your claim to receive your first benefit check.

COVID-19 extended unemployment benefits

On March 27, 2020, Congress passed a $2 trillion stimulus package known as The Coronavirus Aid, Relief, and Economic Security Act that provides direct cash transfers to every adult and expanded unemployment benefits. This law provides an additional $600 per week on top of regular unemployment benefits though July 31, unemployment benefits for self-employed and gig workers, and $1,200 in cash payments plus $500 for each child 16 or under for each qualifying adult. Additionally, as mentioned above, the unemployment benefit period has been extended by 13 weeks for up to 39 weeks under the CARES Act.

Conclusion

We have unemployment benefits to help partially make up for lost wages and support those who are unemployed at no fault of their own. Unemployment benefits provide cash benefits for those who meet the requirements for their state, and the benefit amount is based on past earnings. Unemployment benefits traditionally last for up to 26 weeks, though with current circumstances it has been extended by 13 weeks for a total of up to 39 weeks. To see if you are eligible for unemployment benefits, you must be unemployed at no fault of your own, which usually means due to lack of unavailable work, and also meet your state requirements. To apply for benefits, you need to file a claim with the unemployment insurance program for the state where you worked. You should reach out to your state’s unemployment insurance program as soon as possible after becoming unemployed and if you are unsure about which state(s) you need to file with.