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Enhanced Unemployment Compensation Benefits in Senate Bill

The US Senate and House of Representatives have passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in response to the continued spread of the COVID-19 pandemic. The legislation is intended to provide, among other things, enhanced unemployment compensation (UC) benefits to many who have been affected by the COVID-19 pandemic.

The Act includes a series of provisions to increase and extend unemployment benefits.

Existing unemployment benefits

Unemployment insurance (UI) is jointly funded by the federal and state governments to provide a baseline of unemployment benefits for up to 26 weeks. Each state determines its own eligibility levels, benefit payments, and the duration of benefits. UC is typically not available to individuals who are self-employed, unable to work, voluntarily quit, were fired for misconduct, or refused to accept a job without good reason. Beneficiaries are also generally required to have previously worked prior to becoming unemployed and must be currently seeking employment.

If state unemployment reaches certain levels, UC benefits may be extended under the Extended Benefit (EB) program up to 13 to 20 weeks. If a state’s insured unemployment rate (IUR) for the previous 13 weeks is at least 5 percent and is 20 percent higher than the average IUR for the same 13-week period in the two previous years, the state must provide 13 weeks of EB in addition to the 26 weeks of UC. A state may also choose to provide EB under two other options: (i) 13 additional weeks if the state’s IUR is at least 6 percent, regardless of the state’s history; and (ii) 13 additional weeks if the state’s total unemployment rate (TUR) is at least 6.5 percent and is at least 10 percent higher than the state’s average TUR for the same 13-week period in either of the two years prior, or an additional 20 weeks if the TUR is at least 8 percent and at least 10 percent higher than the state’s average TUR for the same 13-week period in either of the two years prior.

Enhanced benefits

The Act includes a series of provisions to increase and extend unemployment benefits. First, most individuals receiving UC benefits will temporarily receive an emergency increase in their weekly benefit of $600. This increase would be fully funded by the federal government and available from the date that the state enters into an agreement to not decrease existing UC benefits until July 31, 2020. The increased payments of $600 would not be considered in determining an individual’s eligibility for the Medicaid of the Children’s Health Insurance Program (CHIP).

Second, the Pandemic Unemployment Assistance program will provide up to 39 weeks of UI to either individuals who have exhausted their benefits (whether UC, EB, or the additional benefits described below) or individuals who are not traditionally eligible for UC (such as the self-employed, independent contractors, and individuals who were scheduled to begin work but are now unable). These benefits would cover weeks of unemployment from January 27, 2020, to December 31, 2020, that are directly attributable to COVID-19. The weekly benefit amount would equal the amount that would normally be provided under state law plus the $600 in additional payments as described above. For the self-employed and others who would not normally be eligible, the weekly benefit amount would be the weekly minimum plus the $600 in additional payments as described above.

Finally, the Pandemic Emergency Unemployment Compensation program will provide 13 additional weeks of benefits for individuals who have exhausted regular UC benefits for the year or have no rights to regular compensation and are able, available, and actively seeking work. The weekly benefit amount would equal the amount that would otherwise be payable under UC plus the $600 in additional payments as described above. The federal government would fully fund these benefits. If an individual is eligible for EB, payment of extended compensation must be deferred until after payment of the pandemic emergency compensation.

The Act is intended to significantly enhance UC benefits and ensure that workers affected by the COVID-19 pandemic maintain a level of financial stability in these uncertain times.

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