When you lose your job or have your hours reduced, it can create a great deal of stress in an already difficult time. Even if you're not making any money, your monthly bills still need to get paid. While you're looking for a new job, unemployment benefits provide temporary income to help cover your monthly expenses. This unemployment benefits guide will help you understand what they are, who is eligible, and how to easily set up direct deposit to receive your benefits each month. Also, we cover the recent changes to unemployment benefits as a result of COVID-19.
What unemployment is and who is eligible
What are unemployment benefits?
Part of the payroll taxes that companies pay for is something called unemployment insurance. This insurance covers the company's employees in case they become unemployed.
Companies pay a percentage of each worker's pay into their state's unemployment fund. Each state has its own calculation, but the rate that a company pays is also affected by the number of that company's former workers that have filed for unemployment benefits.
Unemployment benefits are designed to replace a portion of your income while you are actively searching for a new job. These benefits are available for a limited time. For most states, unemployed workers may receive up to 26 weeks of unemployment benefits. During periods of higher unemployment numbers, the federal government may extend unemployment benefits for a longer period. For example, during the financial crisis of 2008 to 2010, unemployment benefits were extended for some individuals for up to 99 weeks. And now, during the COVID-19 pandemic, unemployment benefits are also being impacted, which we'll cover in more detail below.
Every state's benefits are different, so check with your state to determine what benefits you can expect. For example, in California, the weekly benefits range from $40 to $450 per week depending upon your wages over the previous 18 months.
Who is eligible to file for unemployment?
Not everyone without a job can file for unemployment benefits. Each state has different rules, but you will usually qualify for unemployment help if you:
- Are unemployed through no fault of your own. This means that if you quit your job, you may not be eligible for unemployment benefits. If you had a good cause for quitting, you still may be eligible and may need to consult with an employment attorney if your application for benefits was declined.
- Meet work and wage requirements. To be eligible for unemployment benefits, you must meet your state's requirements for time worked and the amount of wages earned. In most states, the unemployment office will look at your work history for the last 12 to 24 months.
- Must be ready and willing to work. To show the unemployment office that you are ready and willing to work, you should be actively searching and applying for new positions that you are qualified for. Requirements vary by state.
- Meet additional state requirements. Every state has different rules for unemployment benefits, and this means that some states have additional requirements you must meet before you can start receiving benefits. Visit CareerOneStop, which is sponsored by the U.S. Department of Labor, to learn more about your state's unemployment benefits and guidelines.
How the CARES Act affects unemployment benefits
Due to the coronavirus pandemic, many workers across the United States were laid off, furloughed, or had their work hours reduced. In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which greatly expanded unemployment benefits and who was eligible to receive them.
The CARES Act is a $2.2 trillion economic stimulus package that is a piece of the federal government's response to the economic hardships facing millions of Americans due to COVID-19. In addition to expanded unemployment benefits, this stimulus bill also included a one-time payment of up to $3,400 per family, payroll assistance for small businesses, and funding for local governments.
Increased unemployment benefits eligibility
Under the CARES Act, many workers who were not eligible under traditional unemployment eligibility criteria may now qualify to receive financial assistance from the Pandemic Unemployment Assistance (PUA) program. For example, those eligible now include those who are self-employed, quarantined due to coronavirus, or caring for a family member due to coronavirus.
You may be eligible for unemployment benefits under PUA program if:
- Your employer permanently or temporarily laid you off due to coronavirus
- Your employer reduced your work hours due to coronavirus
- You are self-employed and lost income due to coronavirus
- You're quarantined and cannot work
- You're unable to work due to risk of exposure to coronavirus
- You can't work because you're caring for a family member due to coronavirus
For the first time, self-employed and gig economy workers are eligible to receive unemployment benefits through the CARES Act.
Unemployment help with an extra $600 per week
In addition to the usual unemployment benefits that you are entitled to, the CARES Act authorized an extra $600 per week to eligible recipients of unemployment benefits. All eligible unemployed workers received an additional $600 per week for a maximum of six months. However, this benefit expired on July 31, 2020.
Congress and the White House are negotiating for another economic stimulus package. The House of Representatives passed the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act in May 2020, while the Senate is proposing a $1 trillion relief bill. The latest versions of these competing bills include additional unemployment benefits. However, it is unknown what the final benefits will look like after they complete their negotiations. For the latest benefit information, visit the U.S. Department of Labor's unemployment insurance website.
Increased length of unemployment benefits
Under the CARES Act, unemployment benefits have also been extended an additional 13 weeks beyond what each state's rules currently provide. This is a welcome relief for people who have had difficulty finding employment while many businesses remain closed during the coronavirus pandemic.
For example, if your state provides 26 weeks of unemployment benefits, this expansion of benefits could provide eligible individuals with approximately nine months of financial assistance while looking for a new job.
How do I stay eligible for unemployment benefits?
Again, the requirements will vary from state to state, but here are some steps that you should expect to take to stay eligible for unemployment benefits:
- File weekly or biweekly claims by phone or mail
- Be able or available to work and actively seeking employment
- Report any earnings you receive from work performed
- Report any job offers received, accepted, or declined
- If requested, you may need to visit your local unemployment claims office at a specified day and time
- Meet any other state-specific eligibility requirements
If you have any questions about eligibility, contact your local state office for unemployment help and advice.
Why direct deposit is beneficial for unemployment benefits
There are several reasons you should use unemployment direct deposit instead of a paper check for your benefits.
Access your money sooner
When your unemployment benefits are deposited into your bank account, you'll get access to your money sooner. You won't have to wait for the check to arrive in the mail.
If you use a service like Netspend, you may qualify to receive your money up to two days faster1 with direct deposit. And when you receive $500 or more per month in payroll or government benefits deposited into your account, you'll qualify for an upgrade to Netspend Premier, which saves customers almost 50% on monthly fees2 and provides additional benefits, like a $10 purchase cushion3 and the ability to customize your card with a photo at no additional cost.4
Paper checks can get lost
By having your unemployment benefits direct deposited into your account, your money is more protected than a paper check that is mailed. You don't have to worry about whether the check will arrive on time or be stolen out of your mailbox. There's also no risk of misplacing your paper check before you get a chance to deposit it.
Save time by avoiding the bank
Direct deposit of your unemployment benefits also saves you time. You have better things to do with your time than driving to the bank or waiting in line to deposit or cash your check. That time can be better spent looking for a new job, spending time with your family, or taking care of a loved one.
You don't have to carry cash around
Some people cash their unemployment check because they don't have a bank account. This can increase your risk of misplacing the money or having it stolen. Instead of carrying cash, direct depositing your money onto a prepaid debit card like Netspend can help protect your money and makes it possible to make purchases or pay bills online.
How to set up unemployment direct deposit for benefits
Now that you're ready to set up a direct deposit for your unemployment benefits, here's how to do it. First, gather the information that the unemployment office requires. The information may vary from state to state, but this information generally includes:
- Name and address of your financial institution
- Your account number
- The bank's routing number
- Phone number of the financial institution
This information and service is available through your bank or through a service like Netspend — just log into your account online, through the mobile app,5 or by calling customer service.
Next, provide this information to the unemployment office in-person or online, depending upon the state. You may need to provide your Social Security number and PIN to access your state's online unemployment dashboard.
Once you've set up your direct deposit of unemployment benefits, it may take a couple of benefit cycles before the payments start arriving electronically. In the meantime, you may still receive a paper check until the direct deposit starts.
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