CARES Act: Unemployment Benefits
Background: Unemployment is a resource available to those when they lose their employment. It is meant to provide a percentage of the previously earned income while you look for other employment. During this Coronavirus pandemic there have been Millions unemployed temporarily and/or permanently. Because the length of this pandemic is uncertain and the typical unemployment time may be longer than normal, benefits have been extended.
Timing: Typically, it can take a week before unemployment benefits begin. The CARES Act provides that the Government will pay for the first week of unemployment, decreasing the wait time for people who need to receive payments. An extension of time to a potential 39 weeks has been allowed versus the typical 26 weeks or less, depending on your state.
If you find yourself unemployed, even if you’re furloughed temporarily, this should be the first benefit that you apply for to start receiving some income right away.
- The government will cover the first week of unemployment, speeding up the time for you to receive benefits.
- With passage of the CARES Act, even those who are typically not eligible for unemployment benefits, because they don’t pay into their State Unemployment system (for example, self-employed consultants), are eligible to receive these benefits.
- Those receiving benefits may receive an additional $600 per week, for up to four months. This increase is being funded by the Federal Government, paying the additional amount to the States so they can pay those who qualify for these benefits.
- If you reach the end of your normal unemployment benefits, typically 26 weeks or less, the CARES Act allows for those benefits to continue for another quarter, or 13 weeks.
An additional benefit created in the CARES Act will allow for States to create a program for future benefits, not benefits payable today. This program specifically refers to short-time benefits. Short-time refers to those who have seen hours drop or wages lowered but are still employed. Not all states provide for benefits for short-time compensation. The Act provided for the Federal Government to pay up to 50% of the costs to put a program into place through the end of 2020. You can see how this type of a program likely affects many workers even during a normal economic environment.
Interested in the other areas of the CARES Act? We are breaking down these details by section in the following resource. You can click to the particular section you’re interested in directly below if you’d like to read the specifics of those first. We do encourage you to look through all of the sections that could potentially impact you since this is a very generous bill aimed at keeping our country’s economy strong during and after this pandemic.
Like any benefit that becomes available to you it is critical to see if it makes sense to use the provisions allowed. While a benefit might make your temporary financial situation better, it might not be beneficial in the long term. However, those who need these provisions were created for are likely in immediate need to use the benefits until employment returns to normal.
Wondering how this affects your future finances? Schedule a call with Financial Design Studio, financial advisors in Deer Park, to discuss your portfolio today.
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