Unemployment Insurance in the US

According to the Bureau of Labor Statistics, as of June 2021, the U.S. unemployment rate rose by 0.1% from May figure to 5.9%. The rate was as high as 11.1% in June 2020 but the statistics show a declining figure since the pandemic flattens. While many people are getting hired, some are fired and there is a worry as to what to do during a job loss. Well, if that is your worry, this post will tell you what to do when job loss hits.

In the event of job loss or unemployment, Unemployment Insurance is fantastic insurance that exists to help you back on your feet while you search for another job. There are certain conditions you must fulfill to benefit from Unemployment Insurance. Read along if you want to understand how the insurance works and the conditions attached to it.  

What Is Unemployment Insurance (UI)?

Referred to also as unemployment benefits, Unemployment Insurance (UI) happens to be a kind of insurance that pays individuals money weekly in the event of job loss provided they meet certain set requirements. The job loss must not be as a result of the fault of the person or voluntary resignation else they would not be qualified. 

As mentioned above that Unemployment Insurance is state-provided, each state manages its unemployment insurance program although it is federal law. As a result of this, workers are expected to satisfy the work and wage requirements of the state they reside in, including time worked. Those state governments principally pay out the benefits which are funded with specific payroll taxes collected for that purpose. 

In the US, the Unemployment Insurance (UI) program is operated throughout the 50 states of the country, the District of Columbia, Puerto Rico, and the Virgin Islands under the oversight responsibility of the Department of Labor. Hence, the states and jurisdictions mentioned, provide unemployment benefits to eligible workers who were rendered so as a result of no fault of theirs and are qualified based on eligibility requirements.

Furthermore, the federal government is adding to the unemployment benefit established special provisions to help unemployed Americans during the coronavirus pandemic. These additional benefits were signed in March 2020 by President Donald Trump and it is called the Coronavirus Aid Relief and Economic Security (CARES) Act. The additional benefits were extended after passing the Consolidated Appropriations Act of 2021. In 2021, March 11 to be precise, President Joe Biden, signed the $1.9 trillion American Rescue Plan Act of 2021 thereby extending the additional unemployment benefits again.

Understanding Unemployment Insurance (UI)

First of all, you must understand that the Unemployment Insurance program is a joint package between individual state governments and the federal government. How it works is that it provides cash compensations to unemployed individuals who actively seek employment. The cash stipends are paid to eligible, unemployed workers through the Federal Unemployment Tax Act (FUTA) in conjunction with the state employment agencies.

Read Also: Federal Deposit Insurance Corporation

Each of the states/jurisdictions has the right to create its unemployment insurance program provided such is established in line with the specific guidelines laid down by the federal law. Federal law makes unemployment benefits relatively universal across state lines. Furthermore, for better supervision, the U.S. Department of Labor monitors the program and ensures strict compliance within the states/jurisdictions.

All the workers that meet the set requirements may get up to 26 weeks of payout a year. The stipend is designed to replace half of the employee’s regular wage (but on average). The states with taxes levied on employers, fund the unemployment insurance program. Furthermore, many employers pay both federal and state unemployment FUTA taxes except those with 501(c) status. In addition, three US states also require that employees make minimum contributions to the state unemployment fund. 

Now, based on the prevalent situation, all those unemployed as a result of COVID-19 may be eligible for any of the government relief programs earlier mentioned. For emphasis, these programs include the Pandemic Emergency Unemployment Compensation (PEUC) and Federal Pandemic Unemployment Compensation (FPUC). 

Also, unemployed individuals who remain unemployed after 26 weeks may be qualified for an extended benefits program. The extended benefits program offers out-of-work persons an extra number of weeks of unemployment benefits. However, the extended benefit is dependent on the overall unemployment situation of each state.

Who is eligible for Unemployment Insurance?

The category of individuals eligible for this benefit program must meet all of the following conditions:

  • They must be unemployed through no fault of theirs 
  • They must have worked during a specified period, usually up to 18 months
  • They must have earned a minimum amount of wages as determined by each state 
  • They must be actively seeking work each week they are collecting the benefits
  • They must meet other specific requirements determined by state law.

Requirements for Unemployment Insurance (UI)

Unemployment Insurance is not a gift, those who wish to must fulfill some requirements as we shall consider in detail in this section. If you are unemployed and wish to qualify for unemployment benefits, you must meet two primary requirements. 

  • You must meet state-mandated thresholds for either earned wages or time worked in a state base period. 
  • Your state must confirm that you as unemployed did not attain that status due to your fault. 

If you can meet these two requirements, you can proceed to file your unemployment insurance claim. Remember that you must file the claims in the state where you work and that can be done via phone or on the state unemployment insurance agency’s website. It usually takes about two to three weeks to process and approve a claim after the first application.

Read Also: Errors and Omissions Insurance

If the claim is approved, you must either file weekly or biweekly reports to your state that test or confirm your employment status. If you don’t continue submitting reports, you will be disqualified from the payable benefits. During the weekly or biweekly report filing, you must report any income earned by you from freelance or consulting gigs.

Special Considerations

The year 2020 was a notable year in history – the world was ravaged by COVID-19, the illness caused by a novel Coronavirus. The virus caused a massive disruption in the economy of nations. It gave another complexion to unemployment insurance, hence the term special consideration. In the year 2020, precisely the 11th of March, the World Health Organization (WHO) declared COVID-19 a pandemic. As a result of the pandemic, states and businesses across the U.S. and the world over closed down which precipitated massive job loss and unemployment.

To help mitigate the effects the hardship of unemployment is having on the masses, Lawmakers came up with and passed the CARES Act. This landmark legislation (signed into law in March 2020) partly expanded states’ ability to provide Unemployment Insurance to millions of workers affected by the virus. This also includes individuals who originally were not eligible for unemployment benefits.

To help Americans who were out of work due to the pandemic, three specific programs were designed and a fourth one was established through an August 8 2020 memorandum. The memorandum was issued by President Trump in response to the expiration of the Federal Pandemic Employment Compensation program.

Federal Pandemic Unemployment Compensation (FPUC)

This program is designed to offer additional benefits to the regular Unemployment Insurance (UI). When the CARES Act was passed, it originally provides an additional weekly benefit of $600. When the $600 weekly benefit expired on July 31, 2020, the FPUC was revised and extended as part of the Consolidated Appropriations Act in December 2020. Under the improved act, beginning after December 26, 2020 persons out of the job get paid an additional benefit of $300 per week (retiring the original $600 weekly benefit).

Furthermore, when President Joe Biden became the 41st President of America, he signed the $1.9 trillion American Rescue Plan Act of 2021 on March 11, 2021, which is a further extension of the FPUC. Under the new plan, the FPUC benefits expire on September 6, 2021.

Importantly, the FPUC benefit was not payable from July 31, 2020, to December 26, 2020, hence the $600 additional benefit ended on July 31, 2020. From the foregoing, the $300 officially started being paid after December 26, 2020.

Pandemic Unemployment Assistance (PUA)

The Pandemic Unemployment Assistance (PUA) was designed to enlarge the category of individuals eligible under Unemployment Insurance to include individuals who generally may not qualify for the unemployment benefits. Such persons are self-employed workers, freelancers, independent contractors, and part-time workers affected by the pandemic.

The PUA was set to expire on December 31, 2020, under the CARES Act but because of the Consolidated Appropriations Act, it was extended to March 14, 2021. This offers unemployed US workers a today of 50 weeks of benefits.

The Biden Administration passed the $1.9 trillion package in March 2021 which gave new life to the PUA by adding an additional 29 weeks to the program. The PUA under the Rescue Plan Act will expire after a total of 79 weeks on September 6, 2021.

Pandemic Emergency Unemployment Compensation (PEUC)

To further offer more succor to Americans out of work due to the pandemic, the Pandemic Emergency Unemployment Compensation (PEUC) was created. The PEUC extends the benefits payable from the Unemployment Insurance benefits after regular unemployment compensation benefits were exhausted under the CARES Act.

The program was set to expire on December 31, 2020, but was extended to March 14, 2021. The extension increased the number of weeks by 11 weeks i.e., from 13 weeks to 24 weeks.

An additional 29 weeks was added to the program by President Biden and extended the PEUC program to September 6, 2021. The result of this is that unemployed workers can claim up to 53 weeks of benefits under the Rescue Plan Act. 

Lost Wages Assistance (LWA) Program

The Lost Wages Assistance (LWA) program is another federal-state unemployment benefit that offers weekly compensation from $300 to $400 to eligible claimants. The Federal government, through the Disaster Relief Fund (DRF), makes a payment of $300 to each claimant every week. The states on the other hand are mandated to provide the balance of $100. When the FPUC expired on July 31, 2020, the Lost Wages Assistance program came into being.


The role of Unemployment Insurance is today cannot be overemphasized. The US government as seen above committed efforts to establishing wonderful programs to ensure the masses are free from the hardship of job loss. Hence, it is important to take advantage of this government-managed program and do check your state to confirm you are eligible for the package.

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