No one wants to be out of work. Unfortunately, the COVID-19 pandemic has had a devastating impact on the job market, driving up the unemployment rate to a new high of 14.7% in April 2020. Losing your job has a devastating effect on personal or family finances. Many Americans have little or no emergency savings, and without a regular paycheck, it can be hard to pay the bills. That’s why there is unemployment insurance.
The role of unemployment insurance is to provide a cash stipend to unemployed workers to help them with household expenses until they find a new job. The monies are paid by the state using funds collected as part of an employer’s payroll taxes. Although unemployment insurance is not designed to pay all your living expenses, it can be a real help to individuals and families struggling to pay for necessities such as housing and food.
What Is Unemployment Insurance?
Unlike auto insurance, homeowners insurance, or insurance protection that you can purchase, unemployment insurance is a government benefit to help anyone who loses their job.
Money that pays for unemployment benefits is not part of the deductions from your paycheck but is collected from employers by the federal government as outlined by the Federal Unemployment Tax Act (FUTA), although money is disbursed by state unemployment agencies. In addition to federal unemployment taxes, many states impose their own unemployment taxes as well.
If you qualify for unemployment, you can collect up to half of your wages in unemployment benefits for up to 26 weeks, although each state’s regulations are a little different.
In Washington state, for example, you are eligible for unemployment benefits for a full year (52 weeks) and can receive benefit payments for 13-26 weeks. Benefit payments range from $201 to a maximum of $844 per week and are calculated based on your earnings.
In Oregon, you also can receive up to 26 payments in a 52-week period. The weekly benefit payments are calculated to be 1.25% of your total annual salary, so if you make $50,000, you would receive $625 per week. Benefits are calculated based on gross wages paid for the previous five quarters.
Do You Qualify for Unemployment Insurance?
Although unemployment benefits are not based on financial need, there are criteria you need to meet to qualify for unemployment insurance benefits. The most basic criterion is that you are unemployed because of no fault of your own. That means if you quit your job, you are not eligible, although you are eligible if you are laid off or your job is eliminated. There are other circumstances in which you would qualify for benefits, such as being unemployed because of a strike or because you leave a full-time job to become a part-time worker. It’s best to check with your state unemployment office.
If you are self-employed or haven’t worked enough hours in the previous years, you will not qualify for benefits. You also cannot collect benefits if you have made a previous claim within a specific period. Each state has a different threshold for qualification. In Washington, for example, you need to have worked at least 680 hours in the base year of your unemployment claim to qualify, whereas in Oregon you must have worked at least 500 hours,
Most states have exceptions for military service. In Washington, if you were discharged from military service in the last 18 months, you may qualify for unemployment benefits. Similarly, Oregon offers unemployment services for qualified veterans.
The New Rules of Unemployment Due to COVID-19
With the spike in unemployment following the COVID-19 outbreak, the rules for unemployment insurance have changed to help people cope during the pandemic. Because more people are unemployed and unemployment is expected to be an ongoing problem because of the pandemic, the U.S. government has loosened the requirements for qualification and extended unemployment benefits.
The Coronavirus Aid Relief an Economic Security (CARES) Act was passed to provide economic relief to Americans, especially those who are unemployed. It extends unemployment benefits to self-employed and contract workers who ordinarily would not qualify because they do not receive a conventional paycheck. These workers can claim unemployment benefits through Dec. 31, 2020.
Pandemic Emergency Unemployment Compensation (PEUC) is also part of the CARES Act and extends the number of weeks you can receive benefits by 13 weeks to a total of 39 weeks. You can benefit from PEUC if:
- You have used up your regular unemployment insurance benefits.
- Your last valid unemployment insurance claim expired after July 1, 2019.
- You meet the temporary COVID-19 eligibility requirement.
If you qualify for another form of unemployment benefit from another state or country, if your most recent claim was after June 30, 2019, or if you don’t meet the COVID-19 claim criteria, then you are not eligible. The PEUC benefit expires on Dec. 31.
The CARE Act also loosens restrictions on using retirement funds for household expenses. Normally, if you choose to use 401(k) or tax-deferred retirement funds before they mature, there is a 10% tax penalty. That penalty has been waived through Dec. 31.
Should You File for Unemployment Benefits?
If you qualify for unemployment benefits but you are wondering whether to file or not, you should seriously consider filing. If you are out of work, you are certainly not alone, and there is no shame in being unemployed. Most people lose a job at some point, whether because of a change at the company or a disaster such as a pandemic. Unemployment benefits are there to help you, and you should take advantage of them.
If you are claiming unemployment benefits, you should also be actively looking for work for each week you claim benefits. The state employment office has resources to help. Washington state offers career resources such as WorkSource.com to help you find your next job, and Oregon offers WorkSourceOregon.com.
Taking unemployment doesn’t mean you are required to take the first job that comes your way. The state of Washington makes it clear that you don’t have to accept work that is not suitable, such as:
- Work not in line with your training and experience
- Work that requires you to join or leave a union
- Work that requires unfavorable working conditions
- Work that is farther away than your usual commute
- Work with wages below what is expected for your occupation
- Work that is beyond your physical capabilities
- Work that offends your religious or moral beliefs
As you weigh the decision to file for unemployment, bear in mind that unemployment income is taxable, so you have to plan to include unemployment benefits as income when you pay your taxes. Because the rules have changed during the pandemic, you should check with your state unemployment office to verify how much of your unemployment insurance payments are subject to income tax.
Also remember that you need to file unemployment in the state where you work, not where you live. For example, if you live in Washington but work in Oregon, then you need to file for unemployment benefits with the State of Oregon Employment Department.
If you have questions, your state employment office is the best resource for answers. For example, did you know you can still claim unemployment benefits if you are working part-time or taking temporary work? Check with the unemployment department to determine your eligibility.
There also are a variety of other resources available to answer your questions about unemployment benefits, including:
- U.S. Unemployment Office
- U.S. Department of Labor
- Washington State Employment Security Department
- Oregon Employment Department
- Benefits.gov
- National Employment Law Project
How iQCU Is Helping Unemployed Members
State and federal agencies aren’t the only ones stepping up to help with unemployment. iQ Credit Union has its own programs to support members who are financially struggling because of the COVID-19 pandemic. Among the services iQCU is offering members are:
- A three-month holiday on loan payments: If you have an iQCU auto loan, personal loan, or home equity line of credit, you can request to skip payments for up to 90 days.
- Mortgage forbearance: Your mortgage payment is usually the biggest monthly expense. iQCU is offering up to 180 days of home loan forbearance to qualified borrowers, with an option to extend for another 180 days.
- Emergency relief loans: Qualified members can borrow emergency funds at a low interest rate with no payments for 90 days.
- Health benefits: Sometimes losing a job means losing health benefits as well. insureQ can help members set up individual health insurance plans.
iQCU financial advisors are available to help you make strategic decisions about liquidating retirement funds or making IRA distributions. They can also advise you about potential home equity loans and other financial resources that could provide much-needed cash to get you through difficult times.
One of the benefits of being a member of a credit union is you can get the financial help you need when you need it. If you want more information, please contact your local iQCU branch.
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