Unemployed? Your Benefits May Be Smaller than You Think

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unemployment benefitsOne of the most frustrating things in life is being unemployed. This is especially true if you want to work, but you are unable to find a job. Even though the unemployment rate is falling, many people still find it difficult to land a job.

Many states administer unemployment benefits to help support those who can’t find work. If you don’t have a job, it might be worth it to see if you qualify for unemployment benefits.

Do You Qualify for Unemployment Benefits?

First of all, you need to determine if you are eligible to receive unemployment benefits. If you quit your job for a reason that isn’t considered a “good cause” by your state’s labor department, you won’t qualify. Additionally, being fired can disqualify you from receiving benefits. If you are self-employed, and you lose your main source of income, don’t expect help from the government, either. Only if you are incorporated and have been paying yourself a salary (and been paying for unemployment insurance) do you have the chance to collect unemployment if you fall on hard times during self-employment.

Also, once you are on unemployment, you are expected to try to find a job. In many states, you will be required to meet with a professional who will check up on your efforts to find a job. Turning down too many jobs can be grounds to reduce or eliminate your benefits. And don’t forget that unemployment benefits are taxable, so you will have to plan to pay taxes on any assistance you receive.

How Much Can You Get?

Because unemployment is administered by the states, how benefits are determined and distributed is taken care of at that level. You can get information on local options from the U.S. Department of Labor. Most states use a formula to determine how much you are eligible each week, usually based on your salary before you were fired. It’s important to understand that unemployment benefits aren’t designed to replace your income entirely; many people can’t maintain a previous lifestyle on unemployment benefits.

You should also realize that unemployment benefits don’t last indefinitely. At one point, unemployment benefits could last as long as 99 weeks, but that isn’t the case anymore. The federal government provides unemployment help to states, which then administer the programs to residents. (States can also use their own resources for unemployment benefits on top of federal resources.) The amount of federal unemployment aid offered is based on a state’s unemployment rate. There are four levels of federal help, based on the rate offered. Now, for the most part, unemployment benefits top out at 47 weeks.

What To Do When Unemployment Runs Out

So, with unemployment benefits lasting for a shorter period of time (less than a year in some cases), you might run out of benefits before you find a job. So, what do you do when you run out of benefits? Here are some of your options:

  • Draw more on your emergency fund: If you have an emergency fund, now might be the time to draw on it more. It can be a source of funds for you while you continue to look for work. And, if things are really tight and you don’t have other options, your retirement account might be an option.
  • Other government assistance: There are other government programs available that can help you stretch your money each month after unemployment runs out. Food stamps, energy assistance, and other programs might be able to provide you with help.
  • Charity: Local food banks can help supply your pantry, as well as low-priced items from thrift shops. You can also turn to your church congregation.
  • Friends and family: Don’t forget your support system. They can help you get back on your feet.
  • Unemployment loans: In some cases, it’s possible to borrow money during unemployment. But you need to watch out for the unscrupulous. Realize that you might be stuck with a higher interest rate as well. This is usually a last-ditch option.

Photo: aflcio

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7 Responses to “Unemployed? Your Benefits May Be Smaller than You Think”

  1. I realize some people don’t know or think they can get unemployment. Then…there are the other people who think “I’ll just get unemployment” not realizing that it is a very time limited benefit. Your advice on what to do when it runs out is very helpful. I bump into people every week who have no idea what to do.

  2. admiral58 says:

    thanks, good advice

  3. Shafi says:

    “Most states use a formula to determine how much you are eligible each week, usually based on your salary before you were fired.”

    Before the above statement, you said

    “Additionally, being fired can disqualify you from receiving benefits..”

    When you’re fired, you don’t get unemployment benefits.

  4. No matter how large your unemployment benefits, you won’t be able to afford the sort of health insurance coverage your employer’s plan offered. A top priority should probably be trying to find a source of at least catastrophic health insurance with a premium you can afford for a while.

  5. Holly says:

    i have a friend who was recently laid off. He checked & does qualify for benefits. However, he REFUSES to apply since the company owner is a ‘friend.’

    In my state the owner pays into the pool per employee, per month not on an as needed (claims) basis. Also, what has this ‘friend’ done for him?

  6. Dave says:

    Unemployment insurance does not even cover Cobra payments. If you are unemployed between now and 2014 you are completely covered by the GOP Plan, which very simply is “don’t get sick or injured!”

  7. admiral58 says:

    The friend should apply. And what kind of friend lays him off?

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