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A number of provisions to help the unemployed are included in the American Recovery and Reinvestment Act (ARRA), and here’s a list of some of the major benefits. Offerings vary greatly by state, so check with your local unemployment office to find out what exactly is available to you.
Increased Unemployment Benefits
The ARRA funds a new temporary Federal Additional Compensation program that suggests states up the unemployment benefit $25 per week for the period beginning February 22, 2009. States also may extend the number of weeks benefits are available from 13 to 20.
“Today, the average length of unemployment is 22 weeks,” says Brad Lazarus, principal at financial planning company Omega Advisors LLC in Chicago. “This extension adds up to thousands of dollars for out-of-work Americans who otherwise would receive nothing after the 13-week mark.”
COBRA Changes
There are two significant changes to COBRA health benefits in the economic stimulus package. One is a new COBRA subsidy, available to individuals who were covered under their prior employer’s health insurance plan and were involuntarily terminated from employment on or after September 1, 2008.
“Eligible individuals will now only be required to pay 35 percent of the COBRA premium under their prior employer’s health plan instead of the full amount,” says Timothy Tracy, Jr., vice president of Gerard B. Tracy Associates, an employee benefits consultancy in Westport, Connecticut. “This subsidy will terminate once the individual becomes eligible under another group health plan or at the end of the nine-month subsidy period.”
Another change allows qualified beneficiaries to elect coverage under a second special election period (the first being when they separated from their jobs), which skirts HIPAA's pre-existing condition exclusion rules for gaps in coverage lasting more than 63 days.
“This is good news for people with a chronic medical condition who may have had to let their COBRA lapse, or couldn't elect at all due to cost,” says Kelly Mason, a consultant with Workable Solutions, an Orlando, Florida-based COBRA administrator. “Ordinarily, these people could potentially find that their new health plan won't cover their existing health problems until a period of time matching the length of their gap in coverage has passed.”
Assistance for Older Workers
Older workers may benefit from an additional $120 million earmarked for the Senior Community Service Employment Program. The program helps unemployed, low-income workers aged 55-plus get training. This is primarily through paid community service assignments for jobs in their communities, according to Cynthia Metzler, president/CEO of Experience Works, an Arlington, Virginia-based organization that provides job training to older workers in 30 states and Puerto Rico.
“As of February 2009, 1.7 million workers age 55 or older were unemployed and looking for work,” Metzler says. “This figure doesn’t include older workers who have become discouraged and dropped out of the labor market. The additional funding will create more training opportunities for these workers, which will help them qualify for some of the 3.5 million jobs expected to be saved or created over the next two years as a result of ARRA.”
Part-Time Work
Nationally, 8.6 million workers reported working less than full-time for economic reasons, according to the Bureau of Labor Statistics. Yet prior to the ARRA’s passage, unemployed workers in 28 states who were looking for part-time work were not eligible for unemployment benefits.
“Under the Act, states qualify for federal dollars if they modernize their unemployment compensation systems, and one of the ways to qualify is to make workers looking for part-time work eligible for benefits,” explains Beth Shulman, senior analyst for the Russell Sage Foundation and author of The Betrayal of Work: How Low-Wage Jobs Fail 30 Million Americans. “Many [states] are reforming their part-time eligibility requirements.”
A Tax Break
The Act also creates a tax break for unemployed workers, exempting the first $2,400 of their 2009 unemployment benefits from taxation. Previously, the entire amount received could be taxed.
“This may not seem like a lot, but if a person is receiving unemployment benefits for a short period of time, this will result not only in a financial boost at the time he or she receives the benefits, but at tax time as well,” says Tim Davis, an attorney with The Lawrence Firm LSC in Covington, Kentucky. “Even if a person receives unemployment benefits for a long duration, this still puts more money into their pockets, because the first part of his or her benefits is tax-free.”
