American Rescue Plan Act of 2021 (H.R. 1319) The American Rescue Plan Act of 2021 allocates an additional $300 billion in unemployment benefits through September 6, 2021. Individuals already receiving benefits will generally be permitted to continue receiving benefits for up to an additional 25 weeks. The Plan would extend four (4) COVID-19 related unemployment benefit programs through September 6, 2021:
- Pandemic Unemployment Assistance ("PUA") - This program provides targeted protections to gig workers and self-employed individuals who are not typically eligible to receive unemployment benefits.
- Pandemic Emergency Unemployment Compensation ("PEUC") - This program has increased the number of weeks of unemployment benefits that individuals who are normally eligible for benefits can receive. PEUC thereby permits individuals to receive benefits for a longer period of time due to the COVID-19 pandemic.
- Federal Pandemic Unemployment Compensation ("FPUC") - This program, also known as the "federal bump," provides individuals that are eligible to receive state benefits to receive a supplemental $300 weekly benefit amount (funded by the federal government) in addition to the weekly benefit amount provided by the State.
- Mixed Earner Unemployment Compensation ("MEUC") - The Plan would also extend the MEUC additional $100 weekly benefit amount. The purpose of the MEUC program is to aid individuals who receive their income through more than one source that includes both self-employment and wages paid by another employer, and therefore are sometimes only eligible for a lower level of state benefits.
Further, although unemployment benefits are typically taxable, the Plan provides that up to $10,200 of unemployment benefits from 2020 will be tax-free for households with a combined income of less than $150,000. On March 23, 2021, the IRS announced that unemployment compensation will not be counted towards this $150,000 income limit. IRS.gov Publications.
The Act also provides relief to individuals affected by the COVID-19 pandemic by a tax-free subsidy that will pay 100% of the COBRA continuation premium for individuals who are eligible for COBRA as a result of an involuntary termination of employment or a reduction in hours and who are, or could have been, eligible for COBRA between April 1, 2021 and September 30, 2021 (the "Premium Assistance Period").
Assistance eligible individuals include COBRA qualified beneficiaries who experienced an involuntary termination of employment or a reduction in hours and who have COBRA coverage during the Premium Assistance Period. Individuals who be eligible for assistance but for the fact that they did not timely elect or dropped COBRA coverage before April 1, 2021, are also eligible for subsidized coverage if they are still within their maximum COBRA coverage period.
This comes on top of the prior Department of Labor's Unemployment Insurance Program Letter No. 16-20, Change 5, which instructs state unemployment agencies that individuals in the following three circumstances and categories are eligible to receive unemployment benefits:
- "individuals who refuse to return to work that is unsafe or to accept an offer of new work that is unsafe";
- "certain individuals providing services to educational institutions or educational service agencies"; and
- "individuals experiencing a reduction of hours or a temporary or permanent layoff."
Unemployment benefits made available under these criteria will be funded through the federal Pandemic Unemployment Assistance (PUA) program. PUA is intended to be a benefit of last resort. These additional eligibility provisions apply retroactively to the beginning of the PUA program, though individuals who did not previously file for PUA "on or before December 27, 2020 are limited to weeks of unemployment [benefits] beginning on or after December 6, 2020."
[ Up ][ Home ] [ Case of the Week ] [ Summaries ] [ Web Sites ] [ About the Author ] [ Contact Us ]