You may get laid off again. Here's what to know about your unemployment benefits

OLIVIER DOULIERY | AFP | Getty Images

Millions of Americans went back to work in May and June as states started reopening and a federal loan program helped ailing small businesses rehire workers.  

But the economic recovery is sputtering, some states have re-imposed shutdown measures and many businesses have run out of loan funding — conditions that may lead to another round of layoffs. 

Indeed, more than half — 56% — of Paycheck Protection Program borrowers have exhausted their loan funding, according to a survey published last month by the National Federation of Independent Business, a trade group.

Nearly a quarter of borrowers expect to lay off at least one employee after using their loan, the group found. And current law doesn't allow businesses to get a second loan. (Business owners have until Aug. 8 to apply for their first one.)

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For people who lose their jobs again, there's a silver lining: They can likely resume their unemployment benefits and essentially pick up where they left off.

However, as is usually the case with unemployment benefits, the rules can be confusing.  

"Everything about unemployment insurance is too complicated," Michele Evermore, a senior policy analyst at the National Employment Law Project, has told CNBC.

For one, states set different rules for their unemployment systems. But here's what Americans across the country can generally expect.

Amount of benefits

Applying for unemployment benefits starts a "benefit year" for that individual. A benefit year is the 52-week period following the date you filed a claim.

Someone who filed for unemployment in March 2020 would have a benefit year that lasts until March 2021, for example.

Jobless workers can collect benefits over that period, even through multiple waves of unemployment.

However, states put limits on the benefits people can receive — in weekly amounts and total duration — over that yearlong time frame. Those limits often mean someone won't be eligible to collect benefits for the whole year.

Americans can think of unemployment benefits like a bank account, said Chris O'Leary, a senior economist at the W.E. Upjohn Institute for Employment Research.

Let's say someone gets about $380 a week — the average in the first quarter this year — in state unemployment benefits. The state, like most others, pays benefits for up to 26 weeks (about six months).

This person would have a "bank account" of $9,880.

Now let's say this person started receiving $380 a week over the 13-week period since early May. They got their old job back and stopped collecting unemployment. After some time, they are furloughed again.

Half their bank account would be left. In other words, they'd be able to resume their old benefit level — $380 a week — for 13 more weeks.

Some states allow people to collect benefits for longer than the maximum duration (i.e., 26 weeks) if they're drawing down a smaller chunk of their "bank account" each week, O'Leary said.

This can occur through work-sharing programs, for example, which pay prorated unemployment benefits to part-time workers. Let's say the same person's hours were cut in half. They could theoretically get 50% of their benefit (i.e., $190 a week) for double the time (52 weeks). 

However, not all states operate their programs this way, O'Leary said.

(One important note: The CARES Act, a federal coronavirus relief law enacted in March, supplements state benefits with an extra $600 a week. These payments, which are funded by the federal government and lasted through July 31, don't increase the size of one's unemployment "bank account.")

A year of unemployment benefits

The CARES Act and other rules mean people can get benefits over a much longer period of time than is typically the case. 

The law funds an additional 13 weeks of benefits for unemployment recipients. This extension, called Pandemic Emergency Unemployment Compensation, expires at the end of 2020.

States also have rules, which predate the CARES Act, that offer "extended benefits" during periods of high unemployment in their state.  

Most states have triggered these additional benefits, typically around 13 extra weeks, Evermore said. Some states like Florida and North Carolina pay fewer (around six weeks), and others pay up to 20 weeks.

Everything about unemployment insurance is too complicated.

Michele Evermore

senior policy analyst at the National Employment Law Project

Unlike the 13 extra weeks offered through the CARES Act, which are unavailable past year-end, the extra weeks offered via "extended benefits" can bleed into next year if a person remains unemployed.

So, our theoretical unemployed worker could access $380 a week for a whole year. (This factors in a typical 26-week state benefit duration, a 13-week CARES Act extension and an additional 13-week period offered via state enhanced benefits).

This amount would be available over several periods of unemployment during that time period.

Going forward, the person would no longer get an extra $600 a week in unemployment benefits that the CARES Act offered through July 31. Federal lawmakers are currently deciding whether to extend or lessen the aid. Any new benefits would likely be retroactive, meaning recipients would get amounts due for weeks of unemployment extending back to the end of July.

Workers may have to reapply for benefits when transitioning into new periods of duration (for example, when transitioning from traditional state benefits to the extra 13 weeks provided by the CARES Act), though states vary in their processes. 

The CARES Act offered some groups, like self-employed and gig workers, a total 39 weeks of unemployment benefits, via the Pandemic Unemployment Assistance program. It expires at the end of the year.

These workers are typically ineligible for traditional state benefits.

What happens when the 'benefit year' ends?

High levels of joblessness could persist into next year.

That could prove problematic for workers who've exhausted or nearly depleted their benefits, Evermore said. 

While a person can reapply for unemployment after the end of their current "benefit year" — in March 2021, let's say, which would mark roughly a year from the beginning of the pandemic in the U.S. — their aid may be much less than it had been previously. They may also be deemed ineligible for any benefits.

States typically use a person's earnings over the prior four quarters to determine the amount of their weekly unemployment pay. But a long spell of joblessness would likely mean workers don't have enough wages over that period to qualify for benefits. If they qualify, it may be for a lower amount.

Congress passed a law during the Great Recession that prevented this dip in benefits from occurring, Evermore said. Lawmakers may do so during this recession, she said.  

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