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Unemployment compensation was designed to provide income to people who’ve lost their jobs. The problem is that benefits run out rather quickly. Your claim lasts one year (your benefit year), but most states only pay benefits for 13 to 26 weeks during the year.
If your unemployment insurance benefits are about to end, what happens next? Your options are limited. But if you prepare early, you can lessen the impact when benefits run out. Here are some routes to explore.
Key Takeaways
- The federal government and many states offer unemployment benefits to eligible former employees looking for new work.
- These benefits, however, typically run out after 13 to 26 weeks, after which time, individuals can no longer receive unemployment.
- Specialized programs do exist to extend unemployment for eligible individuals.
- You may want to seek alternative employment.
Self-Employment Assistance Program (SEAP)
If unemployment is making you think it might make sense to start your own business, check whether your state has a Self-Employment Assistance Program (SEAP). This program allows people receiving unemployment benefits to get training in launching a business.
Most states don’t require people enrolled in a SEAP to actively look for work. That’s because starting their own business is considered their full-time job, with many states requiring a full-time schedule devoted to training. SEAP members participate in entrepreneurial training programs, work with mentors, and develop a business plan.
But SEAP isn’t an extension of unemployment benefits. In fact, you must be early enough in your benefit period to complete the training. You have to be receiving unemployment to be in SEAP, and some states don’t allow enrollment if you don’t have 13 more weeks of benefits left at the time you are accepted into the program.
Because SEAP is paid for by grants, not everybody qualifies. If you do meet the qualifications for the program, your state unemployment office will send you information. Given the time limitations, don’t wait to be contacted. If you’re interested in the program, call your state unemployment office for more detailed information and eligibility requirements.
The SEAP program does not supply funding for the launch of your business, but any income you earn from your new enterprise will not be deducted from your unemployment check.
Nontraditional Employment
If you can’t find a traditional nine-to-five job, consider something different. Perhaps you have a skill that would allow you to earn money as a freelancer. Another strategy is to contact a temp agency in your area and take a temporary job. Seasonal employment—sales jobs during the winter holidays, for example—is a third option. Babysitting, tutoring, or websites such as TaskRabbit may also provide work.
Expired Programs
The Pandemic Emergency Unemployment Compensation (PEUC) program, the Pandemic Unemployment Assistance (PUA) program, the Extended Benefits (EB) program, the $300 Federal Pandemic Unemployment Compensation (FPUC) program, and the $100 Mixed Earner Unemployment Compensation (MEUC) program expired on Sept. 5, 2021.
Weeks of Unemployment Insurance and Extended Benefits Available
You can also try to train in new areas related to your previous career or start a business of your own, even if you can’t get into a SEAP. Some businesses, including consulting, cost very little to launch.
SNAP and Cash Assistance
If your funds run low enough, you may be eligible for food or cash assistance. Eligibility varies, but both options are worth checking out to help you get through a difficult period in your life.
Food Assistance
The Supplemental Nutrition Assistance Program (SNAP) is a federal program that provides assistance to low-income individuals and families.
The program does have work requirements.
Check with your state for any other food assistance programs in addition to SNAP, especially if you have young children.
Cash Assistance
These programs, which provide cash payments and other services, are administered at the state level. Massachusetts, for example, has the Transitional Aid to Families with Dependent Children (TAFDC) program.
How Did the CARES Act Help Unemployed People?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed on March 27, 2020, helped those affected by the COVID-19 pandemic, including part-time and self-employed workers who usually don’t qualify for unemployment benefits. The CARES Act added 13 weeks of coverage on top of whatever each state provides. This period was extended from 13 to 24 weeks with the Continued Assistance for Unemployed Workers Act.
The legislation also provided an extra $600 of federal money per week, on top of the state benefit (covering unemployment through July 25, 2020, or July 26, 2020), for people affected by the coronavirus pandemic and another $300 per week between Jan. 2, 2021, and March 14, 2021. In fact, it provided three different types of unemployment insurance.
What Was the American Rescue Plan?
On March 11, 2021, President Joe Biden signed the American Rescue Plan, which extended the existing $300 per week unemployment supplement until Sept. 5, 2021. However 26 states elected to end the $300 federal supplement early.
Was Unemployment Compensation Tax-Free During the COVID-19 Pandemic?
Yes, a certain amount was tax-free for some taxpayers. A Senate amendment to the American Rescue Plan made $10,200 of unemployment compensation ($20,400 for married couples filing jointly) paid in 2020 tax-free at the federal level for anyone earning less than $150,000. If you filed your tax return before March 31, 2021, the IRS automatically made adjustments based on the exemption.
The Bottom Line
There’s no shame in taking a job outside of your career path, especially if your unemployment benefits are running out. Do your best to plan for the termination of benefits long before that day arrives.