By Kerrie Beene, CFP® and Amy Irvine, CFP®, EA, MPAS®, CCFC
Those who are unemployed or cannot work for coronavirus related reasons will be eligible for benefits under the new Cares Act passed on March 27, 2020.
What is Unemployment?
There are several terms being passed around that all meet the qualifying definition:
Termination of employment
Layoff
Furlough
Who qualifies for the Pandemic Unemployment Insurance?
There are 3 qualifications that must be met
Ineligible for any other state or federal unemployment benefits
Unemployed, partially unemployed, or cannot work due to the COVID-19 public health emergency
Cannot tele-work or receive paid leave
Self-Employed individuals who have had to “close their doors” and are unable to qualify for the small business loans offered through the CARES Act
This will include employees who have tested positive for the corona-virus, as well as, those who must leave their job to provide full time care for a family member or other relative but do not have access to paid leave benefits.
The new law has 2 approaches to assist the normal state-based unemployment programs:
A pandemic unemployment assistance program which matches the normal state unemployment rate plus $600 for unemployed workers who would not normally be eligible
An extension of unemployment compensation by 13 weeks beyond the eligibility time states provide under current law
Differences from Regular Unemployment Benefits
Includes workers who are:
Self-Employed
Independent Contractors
Gig Economy Workers
Those who do not have sufficient work history to qualify for regular benefits
Waiting Periods:
States normally have a one week waiting period and there is now federal financing for states without the waiting period.
Benefit Amounts and Time Frame
The amount varies by state, is subject to a minimum, and is increased by $600 from the Federal Pandemic Unemployment Compensation Program.
Unemployment benefits are based on prior wages, often on the last 4 quarters.
If you are already receiving benefits at the state level, the $600 weekly increase will be provided as a supplement.
Self employed workers will have to have proper work and pay documentation. The benefit amount will be calculated using a formula from the Disaster Unemployment Assistance Program.