Federal Recovery Benefits for Unemployed Workers

Overview

ARRA will help unemployed workers by:

• Increasing unemployment checks by $25 per week
  
• Excluding the first $2,400 of unemployed benefits from federal tax
  
• Allowing more individuals to qualify for extended unemployment benefits by extending the deadlines for application and payment
  
• Providing a federal subsidy of 65 percent of monthly COBRA premiums for up to nine months

Federal Additional Compensation (FAC)

Effective February 22, 2009, claimants receiving unemployment benefits are eligible for an additional $25 supplement in their weekly payment. 

You do not have to apply for the additional weekly benefit.  The $25 weekly supplement will be included in your regular weekly payment.  

The last week a Federal Additional Compensation may be paid is the week ending July 3, 2010.

Please note that the $25 weekly supplement is taxable, and will be included in the 1099-G statement for the year that benefits are received.  

FAC Information for WorkSharing Claimants

The $25.00 weekly FAC benefit will be included in your weekly Unemployment Insurance (UI) benefit payment beginning with the payment for the week ending September 19, 2009 and every week thereafter (through the week ending July 3, 2010).

Additionally, if you are eligible for WorkSharing and received UI benefits at any time between February and September of this year, you will receive retroactive payments during the week of September 14 through 18, 2009.

Federal Tax Exemption for the First $2,400 of Unemployment Benefits

The first $2,400 of unemployment insurance benefits per recipient will be excluded from federal income tax, although state taxes must still be paid. Amounts above $2,400 remain taxable.

Federal and state taxes are not deducted from your weekly benefits unless you request it. 

If you choose to have taxes withheld, DUA will not automatically exempt the first $2,400 of your unemployment benefits from federal taxes, but you can wait and manually elect to change your withholding status after you have exceeded $2,400 in total weekly benefits by completing the withholding form online or returning the Income Tax Withholding Request Form W-4V . 

Emergency Unemployment Compensation 2008 (EUC08) — Program Extension

The deadline for applying for EUC08 extended benefits has been extended from March 31, 2009 to December 31, 2009.  Extended benefits will be payable through May 31, 2010 (originally August 27, 2009).

The EUC08 program, effective July 7, 2008, provides up to 20 weeks of federally-funded benefits to eligible unemployed workers who have exhausted  their regular state unemployment benefits.  Because of high unemployment, an additional 13 weeks of EUC is available to eligible claimants in Massachusetts effective February 15, 2009. With state unemployment benefits and EUC, unemployed workers are currently eligible for up to 59 weeks of benefits. 

New Federal Health Insurance for the Unemployed

Under the American Recovery and Reinvestment Act of 2009, certain individuals who are eligible for continued health insurance coverage under the federal COBRA law, or the Massachusetts mini-COBRA law, may receive a subsidy for 65% of the costs of their health care premium.  If eligible, instead of paying 100% of the premium, you will pay only 35%, for up to nine months, and the organization to which you pay the premium, usually your employer, will pay the remainder of the premium -- 65% -- and offset that expense with a tax credit.

Important requirements:

• You must have been involuntarily terminated from employment between September 1, 2008 and December 31, 2009.
• You must be eligible for COBRA benefits – if you were terminated for gross misconduct, for example, you are ineligible for COBRA.
• Even if you were previously eligible for COBRA benefits but you rejected those benefits, you may still be eligible for the new benefit.  You have 60 days from receipt of notice from your employer to elect COBRA coverage.
• The benefit phases out for individuals whose gross income exceeds $125,000, and for those who file joint returns if their income exceeds $250,000.

Questions, Answers and Links

Go to www.mass.gov/eolwd/cobra for more information.