Update: New unemployment benefits and incentive payments passed by Congress. Here are 6 highlights from the bill
Several critical unemployment programs ended on Saturday.
Unfortunately, there is no need for these programs.
Legislators reacted quickly and decisively in March when they passed a number of federal unemployment programs under the CARES Act to bolster existing state unemployment insurance programs. While the pandemic and the recession it triggered continued, these federal programs expired on Saturday.
According to a report by progressive public policy firm The Century Foundation, 12 million workers faced an unemployment cliff as of December 26th. Some people may still be able to get help from government unemployment programs, but the end of the additional federal aid will mean the end of benefits for millions, says Andrew Stettner, an unemployment researcher who co-authored the Century Foundation report.
It was “economically crazy”, Stettner told us.
As talks about more federal aid continue, the importance of phasing out these programs is becoming clearer. “People are just standing in front of it,” says Stettner. “And I think people are going to be hit very hard this month.”
Exactly what you should know about which programs are phasing out and what steps to take if you are unemployed given this uncertainty about benefits:
Unemployment programs that are phasing out
During normal times, unemployed Americans turn to their state unemployment insurance programs for assistance while they are between jobs. But the pandemic and mass closings earlier this year resulted in historic unemployment that inundated government programs. This is where additional federal aid came into play – increasing and extending benefits to all unemployed workers, including many who would normally not be eligible under government programs.
Here are the four big federal programs that were created to support existing state programs and what it will mean when they expire. All but one – the Pandemic Unemployment Compensation Program (PUC), which paid $ 600 in weekly federal benefits through July – are slated to expire this month.
Pandemic unemployment benefits
The Pandemic Unemployment Assistance (PUA) program offers pandemic-related unemployment assistance to people who are not entitled to regular unemployment benefits. These benefits apply retrospectively for all weeks of unemployment due to the pandemic after January 27, 2020.
Who it helps: Self-employed, freelance or independent contractors and other gig workers – who are otherwise not eligible for unemployment benefits – receive benefits.
Pandemic Emergency Unemployment Compensation
The Pandemic Emergency Compensation Program (PEUC) allows states to provide up to 13 weeks of government-funded unemployment benefits to certain workers, including those who have already used up available regular unemployment benefits.
Who it helps: Workers who have already exhausted the available government benefits.
Federal and state additional services
The Federal-State Extended Benefits program is a permanent program that provides additional unemployment benefits to workers who have received all available state benefits during periods and locations of high unemployment. The CARES Act included adjustments to this program that shifted more funds to the federal government and ensured that workers would continue to have available fringe benefits after they exhausted PEUC benefits.
Who it helps: Unemployed workers who have already received all available government and PEUC benefits.
Pandemic unemployment benefits
The Pandemic Unemployment Compensation Program (PUC) provided an additional $ 600 weekly unemployment benefit through July 31.
Who it helped: People who received regular unemployment benefits through their state programs and additional federal and pandemic-related unemployment programs.
How these programs work
Taken together, these four programs provided multiple levels of unemployment benefits for American workers. So they apply as described in the Century Foundation report:
- State unemployment benefit: This is the first port of call for workers who need unemployment benefits. Government benefits typically provide unemployment benefits for up to 26 weeks, with certain states and circumstances allowing longer.
- PEUC: Available after an unemployed worker has received all available government benefits.
- PUA: Available to the self-employed, freelancers, and other workers who are not eligible for state unemployment benefits at all.
- EB: Available to unemployed workers in certain states after using all available PEUC benefits. These additional benefits are not available to those receiving PUA assistance.
How to prepare
While nothing can replace cash that has been helping unemployed Americans in the past few months, now is the time to start planning if and when these additional federal benefits will end.
“At this point in time, we don’t have a large safety net,” says Stettner. “People can apply for food tickets, Medicaid … so you can put something on the table.”
We’ve covered unemployment and other financial challenges related to the pandemic throughout the year, and some of our best advice has stayed the same. It’s also important to be proactive when you need help. In many cases, you might be able to negotiate with your credit card issuers or other lenders, but if you wait until you are too late with payments, you are likely to have fewer options.
Here is some of the best advice we’ve come across:
- Contact your state representative or senator if you get stuck with your state employment office
- Connect with unemployed Americans in your state, often through Facebook groups
- Become an expert on your state unemployment benefit and schedule, starting with the unemployed side of your state
Reconsider your finances
- Now is the time to start looking for a survival job if you haven’t already, says Stettner. Perhaps you’ve done this in the past while looking for a new job that matches your previous experience. For others, it could be babysitting or driving for Uber, says Stettner.
- Take a look at your budget and make sure it is as lean as possible by cutting down on non-essential expenses
- Contact your credit card issuers and lenders to inquire about and take advantage of pandemic relief or deferral programs
- If you have an emergency fund, now is the time to use it. If you don’t have an emergency fund, you may be able to use your 401 (k) with no penalty.
- Discover potential childcare assistance: some lower-income families may qualify for subsidized childcare, and other local and state programs can provide assistance as well
Forbearance and other utilities
- If you own a home, check with your mortgage lender about the forbearance, which has a December 31st deadline
- If you rent, talk to your landlord, find ways to reduce rent and read up on eviction law
- If you have a student loan, the repayment period has recently been extended to January 31st. If you are unemployed, take advantage of this extra month of student loan payments and interest on hold.
- If you’re one of the 80 million Americans who the US Census Bureau recently found having difficulty paying utility bills, take advantage of government programs.