The American Rescue Plan Act of 2021 Act has passed. You’ve now sifted through all the articles about the third stimulus check and I’m sure your mind goes to the next most exciting question…..which unemployment provisions were affected?!
Many of the provisions enacted in the CARES Act were extended, as they were set to expire as of Sunday, 3/14/21. Here’s a brief refresher and explanation of what effect ARPA has now:
Greater Non-Profit Relief
From UTCA’s standpoint, this may be the single most significant and needed change to the previous federal relief efforts. Non-profit, reimbursable (or “self-funded”) employers incurred disproportionately higher unemployment costs that have had severe impacts to their operations. Due to the mechanisms of how state trust funds are funded, reimbursable employers were left out of the same 100% federal relief of Covid-19 related benefit charges. The CARES Act called for a 50% reimbursement of these charges. Some non-profits were fortunate enough to be in states that increased relief to 100%, but most states adopted the federal guidance at 50%. Under ARPA, that rate of relief increases to 75% from 3/15 through 9/6. While this is a positive step, UTCA continues to advocate for 100% relief and hopes local and state legislators persevere to include greater forgiveness in future legislation.
Pandemic Unemployment Assistance (PUA)
This brand-new for 2020 program was a scramble to get instituted across all the state unemployment agencies. Being paid through federal funds, it offers a $600 per week payment to those traditionally ineligible to receive unemployment benefits (self-employed, gig workers, 1099s) who were unable to work due to Covid-19. The passing of ARPA will now extend the weeks of benefit payment eligibility to 9/6/2021.
Federal Pandemic Unemployment Assistance (FPUC)
FPUC is the often-discussed, sometimes controversial weekly “boost” provided by the federal government in addition to the state issued weekly benefit amount. This is relative to those who normally qualify for state unemployment and who are unable to work due to Covid-19. In most states this is a period of 26 weeks, though some vary as high as 30 weeks (Massachusetts) and some as low as 12 weeks (North Carolina). This weekly boost was originally set at an additional $600 per week on TOP of state benefits. Many wondered if this rich benefit deterred some claimants from returning to work, as in some states the $600 was exponentially higher than the max benefit rate allowed. After the expiration on 7/31/20, the Lost Wages Assistance Act provided some relief in the fall of 2020, but most commonly at a reduced rate of $300 per week and most payments were issued until the week of 9/5/20. The CARES Act extension was signed on 12/27/20 that has bought us to the current term of FPUC, which issued payments from the first week of January but again at a reduced rate of $300/week. The original outline of ARPA called for an increase of $400 per week, but ultimately was voted to remain at $300 but to extend 9/6/2021.
Pandemic Emergency Unemployment Compensation (PEUC)
PEUC is paid to individuals who have exhausted all rights to state unemployment compensation. The amount to be paid is the amount of regular compensation plus $300 per week (consistent with amount of Pandemic Unemployment Compensation). This is similar to how traditional extended UC Benefits adds weeks to regular UC and continues with the additional $300. The extension of this program from the original CARES Act, it’s extensions and now in ARPA brings the total weeks of PEUC to 53. This is after the initial state UI weeks are exhausted.
Waiting Week Reimbursement
As provided initially in the CARES Act, the federal government was reimbursing states for waiving their waiting week periods. In an effort to allow claimants to file and be paid in a timely fashion, the federal government has agreed to pay this week if states re-enter into an agreement. States varied on their adoption and expiration of this waiver, with some ending it as early as April of 2020, while some states never had established waiting week policies. Similar to the previously mentioned extensions, ARPA will make this waiver available through 9/6/21.
Aiding Administration and Fighting Fraud
ARPA has allotted eight billion dollars to aid efforts in processing claims more efficiently. Unfortunately, the pandemic exposed many of the legacy processes and platforms that state UC agencies had relied on. Coupled with a trend of reducing their own workforces prior to Covid-19, massive claim backlogs, system crashes, employer and claimant complaints have resulted. The CARES Act had provided funds to enact changes, and it is understood that much of these funds were used on creating systems to properly administer the new PUA programs at the state level. It is unclear what these federal funds are contingent upon and if updating state systems that aren’t relative to carrying out “Federal activities relating to the administration of unemployment compensation program” would qualify.
With the historic claim levels came an even more shocking number of fraudulent unemployment claims. Every state has been impacted, causing a massive strain on state agencies, employers and their employees who are the direct victims of the UI fraud schemes. Measures to combat these attacks have been inconsistent, and in some instances created greater exposure of claimant data. Worst yet, means to add security measures such as additional ID verifications steps have greatly slowed claims processing times. Per ARPA, the federal government has dedicated two billion dollars to “detect and prevent fraud, promote equitable access, and ensure the timely payment of benefits with respect to unemployment compensation programs”. This is much needed, but states need to be very wary of the consultants and technology they align themselves with as they rush to find solutions.
State Forgiveness and “TBD”
Also, per ARPA the federal government has agreed to extend waivers of accrued interest on loans issued to states to pay unemployment compensation. This is in effect through 9/6/21.
What ARPA does not provide a clear, specific distribution to state UI trust funds, however, states are provided with large allocations of funds that may be used to address the costs of the Pandemic. It is yet to be determined how states will be able to utilize funds and what contingencies they may be subject to. This is critical as states are weighing serious tax rate increases which could impact the cost to employers for years to come. Some states have already enacted surcharges or temporary increases, while some are agreeing to freeze rates in the short term. It’s clear that UI trust funds across the country are in danger. UTCA is working to verify what it available to states and how the funds can be used.
Is your head spinning yet? As we continue to “unpack” this enormous bill we will continue to track how the states will adopt these new programs and extensions. If you have questions as to how this might relate to your workplace or employees, don’t be afraid to contact us here .