5 Things You Must Know About Biden Stimulus if You’re Unemployed

The bill extends two temporary unemployment programs for an additional 25 weeks through Sept. 6:

• Pandemic Unemployment Assistance, or PUA, which provides assistance to gig workers, freelancers and self-employed people who traditionally wouldn’t have qualified for unemployment.

• Pandemic Emergency Unemployment Compensation, or PEUC, which provides an extra 13 weeks of benefits on top of the 26 weeks that states typically offer.

Prior to the relief bill, both programs were scheduled to expire March 14.

2. Your weekly unemployment checks won’t increase.

The amount of those checks won’t change, though. Workers who were laid off from a regular job will continue receiving an additional $300 a week federal subsidy on top of their state’s weekly benefit. The average state benefit was $324 in the third quarter of 2020, the most recent quarter the U.S. Department of Labor has data for.

The original version of the House bill contained a $400 weekly federal boost to state benefits. However, Democrats agreed to a lower $300 a week supplement to appease moderate Democratic Sen. Joe Manchin of West Virginia, who threatened to vote against the relief bill.

Some “mixed earners,” i.e., workers who earned a combination of wages and self-employment income, will continue to receive an additional $100 each week, or a total federal benefit of $400. The reason for those higher payments is that these workers are typically eligible for lower state unemployment payments.

3. The first $10,200 of unemployment benefits will be tax-free for 2020.

Many workers have been surprised to discover that unemployment benefits are taxable. To help workers who have lost their jobs avoid a major tax bill, the relief package retroactively exempts the first $10,200 of unemployment benefits from taxes for households with incomes of $150,000 or less in 2020.

The law only applies to benefits paid in 2020. You should still plan on paying taxes for any compensation you get in 2021. The IRS has yet to issue guidance for what to do if you received unemployment and already filed your taxes for 2020.

4. The bill makes it more affordable to buy health insurance.

If you lost employer-sponsored health coverage because your job was eliminated or your hours were cut, the federal government would pay 100% of your COBRA premiums through Sept. 30.

COBRA allows you to continue coverage under your former employer’s plan. It’s an expensive option for keeping health insurance because you’re typically responsible for 102% of the premium both you and your employer paid. You’re not eligible for government-paid COBRA premiums if you voluntarily left your job.

The bill also makes it more affordable to buy insurance through the Affordable Care Act. It caps health care exchange premiums at 8.5% of your income.

5. You could see a gap in unemployment benefits.

State unemployment systems often need time to update and reprogram when benefits are extended. So even though the extension passed before the March 14 expiration date, it’s possible that you’ll experience a temporary lapse in benefits. If a gap does occur, any benefits you were eligible for would be paid retroactively.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]

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