Most people carry insurance to shield them from the full financial effects of a potential disaster, whether it be a home burning down, a car accident or the loss of a job. While you can find private insurance that covers some types of income loss (like disability insurance), many Americans rely on federal and state government programs that provide assistance when they are unemployed through no fault of their own.
TL;DR (Too Long; Didn't Read)
The government offers unemployment insurance to assist workers who lose jobs due to no fault of their own. While all states permit people receiving unemployment benefits to engage in part-time work, each has its own formula for how much you can earn before benefits are reduced.
What Is Unemployment Insurance?
State and federal unemployment programs provide help to eligible workers who find themselves unemployed through no fault of their own. Workers applying for unemployment benefits must establish that they have earned a certain amount of wages during the base period, often the 12 months before the job loss. They must show that they are totally or partly unemployed through no fault of their own. In addition, they must be able to work, be available to work and be willing to work. Many states require that you be actively looking for work before any benefits can be paid.
You usually should apply for unemployment the first week after you lose your job or have your hours reduced. Don't wait too long since it takes time for the government to review your claim. In Massachusetts, for example, claims are generally processed within three to four weeks after you apply.
Unemployment Insurance Benefits
The unemployment insurance benefits for which you are eligible depend on a variety of factors, mostly financial. First, you have to establish that you earned sufficient money (as detailed by state law) in a four-quarter base period to qualify. Your weekly unemployment benefit is based on the wages you earned in the base period of your claim. The total benefits available in your claim are also based on your base period wages.
The weekly benefit amount (the check you get each week) is calculated using the quarter of the base period in which you earned the highest amount. In California, for example, benefits vary significantly depending on how much you earned. The minimum weekly unemployment benefit amount is $40. The maximum weekly benefit amount is $450. To figure out your benefit amount, you'll need to divide the maximum amount you earned during your highest-paid quarter of the base period by 26.
Getting Unemployment While Working
When you look at the average unemployment benefits, you may feel that it would be very difficult to make ends meet on the amount offered. Many unemployed workers find that to be the case, especially over the longer term. If you are thinking of taking a part-time job to supplement your unemployment benefits, you'll want to first research your state's laws. They vary significantly about how much you can earn before benefits are reduced.
Many states allow unemployed workers to take on part-time work while receiving unemployment benefits. Generally, you continue to qualify for unemployment benefits as long as the amount you earn is less than the unemployment amount. But, you must report your earnings and, if you make enough, it's likely your benefit will be reduced.
Each state has its own formula in this regard, some far more lenient than others. The formula is usually are based on your weekly benefit amount. For example, in Massachusetts, you can earn up to one third of your weekly benefit amount without having your unemployment benefit reduced. But if you earn more, it is deducted dollar-for-dollar from your payment.
In South Carolina, on the other hand, you can only earn up to one quarter of your weekly benefit amount without having your benefit reduced. Failure to report earned income is classified as fraud.
These rules apply to earned income. What about Social Security payments? Most states do not reduce your unemployment benefits because you get Social Security benefits, no matter how much you get. But a few do, including Illinois, Louisiana, Minnesota and South Dakota.
- U.S. Department of Labor: Unemployment Insurance
- Massachusetts Government: Apply for Unemployment Benefits
- Massachusetts Government: Working Part-Time While REceiving Employment Benefits
- South Carolina: Can I Earn Wages While Receiving Unemployment Benefits?
- South Carolina: UI Fraud
- The Motley Fool: Can I Collect SS and Unemployment at the Same Time?
- AARP: Can I Collect Social Security and Unemployment at the Same Time?