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FYI: The CARES Act and Unemployment Insurance

April 1, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides an estimated $260 billion in enhanced and expanded unemployment insurance (UI) to millions of workers throughout the country who are being furloughed, laid off, or finding themselves without work through no fault of their own because of the COVID-19 pandemic and our public health response to it.

The CARES Act creates three new federally funded UI programs:

  1. Pandemic Unemployment Compensation (PUC);
  2. Pandemic Emergency Unemployment Compensation (PEUC), and;
  3. Pandemic Unemployment Assistance (PUA).

In addition, it creates a “short-time compensation” program that allows employers to cut hours without workers losing income or employer-provided benefits.

Pandemic Unemployment Compensation (PUC) will provide an additional $600 per week for four months to all people receiving UI benefits, or the newly created Pandemic Unemployment Assistance benefit. This will not impact eligibility for Medicaid or CHIP.

Pandemic Emergency Unemployment Compensation (PEUC) adds an additional 13 weeks to traditional state UI benefits. Most states offer 26 weeks of traditional UI benefits, so PEUC will give most recipients 39 total weeks of UI benefits. The bill directs states to be flexible in their job search requirements, waive waiting periods, and refrain from reducing the length of traditional UI benefits while the states are receiving these new federal funds.

Pandemic Unemployment Assistance (PUA) is available to workers who are ineligible for traditional state UI benefits, such as: self-employed workers, independent contractors, freelancers, workers seeking part-time work, and workers who do not have a long-enough work history to qualify for state UI benefits. People who have exhausted their traditional state UI benefits also qualify. It will have a minimum benefit that is equal to one-half the state’s average weekly UI benefit, estimated at roughly $190 per week. Undocumented workers do not qualify.

Short-time compensation (STC) is a work-sharing program that helps employers avoid layoffs by putting workers on part-time schedules with partial unemployment benefits to help make up for some of the lost income. The federal government will fully reimburse states for all STC programs already in place and provide $100 million in grants to states to implement, improve, and promote STC programs. This option is only available in states with STC programs and with employers who opt in.



Q: What level of benefits will workers get in my state? A: UI benefit levels vary widely from state to state. Data on state minimum and maximum UI benefits can be found here and data on average UI benefits can be found here. Additional information on state UI programs can also be found here.

Q. Do I need to wait a week before receiving UI benefits? A: It depends on your state’s law. Most states have a statutory one-week “waiting period” for people to receive UI benefits. But under the CARES Act, states that waive the one-week waiting period will be fully reimbursed by the federal government for that week of benefits paid out to workers plus the administrative expenses necessary for processing those payments.

Q: Will state workers receive the PUC benefit increase? A: Yes, so long as they are eligible for UI benefits as determined by state law.

Q: When does the PUC benefit increase end? A: The CARES Act terminates the $600 per week PUC supplement on July 31, 2020.

Q: When does the PEUC benefit extension end? A: The new PEUC provides workers with 13 additional weeks of state UI benefits after regular state benefits expire, through December 31, 2020.

Q: Do workers who experience a significant decrease in work hours (but are not laid-off) qualify for any of the new UI provisions? A: If you live in a state that provides partial UI benefits for reduced hours, then you will receive the partial UI benefitsplus the $600 federal PUC supplement. These states are STC states, allowing employers to make an agreement with the state UI office to reduce hours, instead of laying workers off, and then have workers receive partial UI benefits for their lost hours. Individual state policies vary.

Q: Will workers lose their employer provided health insurance if they access any of the new UI provisions? A: Laid off employees can choose to stay on employer-sponsored insurance through COBRA but will no longer receive employer contributions for the premium. Workers who lost their job and were previously covered by employer-sponsored insurance are eligible for a special enrollment period in the ACA marketplace for coverage and may be eligible for advanced premium tax credits and cost-sharing subsidies. Workers and their unions should consult counsel to determine whether applicable state law, or the terms of any applicable employer-sponsored health care plan, offer additional benefits to workers dealing with the fallout from COVID-19.

Q: Are self-employed workers and “gig” workers eligible for unemployment compensation generally and the federal PUC benefit specifically? A: It depends on state law, but self-employed workers do not ordinarily have coverage under the unemployment compensation system, and so they are not eligible for benefits (in part because they do not have employers who contribute to the UC system). Most “gig” workers should qualify for standard UI benefits because most states define “employment” broadly. “Gig” workers should be encouraged to aggressively seek benefits under the traditional UI system. However, under the CARES Act, workers who are ineligible for traditional state UI benefits will be eligible for benefits under the new PUA program based on their recent earnings and will also receive the extra $600 per week in PUC benefits. PUA benefits are only available to workers who are not covered by the traditional UI system.

Q: What is the amount of the PUA benefit? A: The amount would vary by state. The base benefit is calculated according to each state’s benefit formulas, using recent information about the worker’s wages, but the amount would never be lower than half the state’s minimum regular UI payment.

Q: How does the CARES Act help local governments and nonprofits, which are required to reimburse state UC programs for the full cost of all unemployment benefits provided to their laid off or furloughed workers? A: Many non-profit organizations and state and local governments participate in UI using a “reimbursable arrangement.” That means they do not pay the per-worker UI taxes paid by private employers and instead reimburse the state UI office for 100 percent of the cost of benefits paid to workers they furlough or lay off. The CARES Act would provide federal funding to cover half of the cost of reimbursable benefits and provide additional flexibility for those entities to pay the other half over time.