Unemployment extension 101: what you need to know

The Senate passed an unemployment extension Wednesday evening. Who is eligible? Is it retroactive to June 2? When will the checks be in the mail? We cover the basics.

By , Staff writer

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    Eric Bilderback, left, holds his resume as he talks with Mike Watson, a business employment specialist at WorkSource Oregon July 20, in Portland, Ore. The U.S. Senate passed legislation Wednesday that would extend unemployment benefits for an estimated 2.5 million Americans.
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On Wednesday, after weeks of grueling legislative battle, the US Senate has approved a fourth extension of unemployment insurance benefits. It will cost about $34 billion and help 2.5 million people who lost their unemployment benefits on June 2, when the last extension expired.

The legislation adds a new wrinkle, allowing temp work without a future reduction of benefits, but it took away an extra $25 that went to the unemployed as part of the stimulus act. The bill still needs to be voted on by the House, expected by midday Thursday. Then, President Obama is expected to sign the legislation. Here are some basics about the legislation:

Who is eligible?

Basically, anyone is eligible who has not yet finished all the tiers of unemployment insurance. It will help people who have been out of work for more than 26 weeks, which is the period when state benefits end. However, the length of time of the federally funded unemployment benefit varies by state depending on how severe the unemployment is in each state.

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For example, in the Dakotas and Nebraska, where unemployment is low, unemployment insurance is good for only 60 weeks. In places like Michigan, California, and Nevada, where there are more jobless, the benefit is up to 99 weeks.

Who is not eligible?

This bill will not add any additional weeks of benefits for people who have already exhausted their unemployment, a group of people sometimes called the “99ers” because they have already collected 99 weeks of unemployment insurance.

Is it retroactive?

Yes, it will be retroactive to June 2, when the last extension expired. This means some 2.5 million people will get lump-sum checks. However, the checks will not be as large as they had been because the Senate stripped out the $25 per person that had been added as part of the American Recovery and Reinvestment Act.

When will the checks be mailed?

According to Judy Conti of the National Employment Law Project (NELP), depending on each state, people could expect to see their benefits paid in two to four weeks. Some states, such as California, are known as being slow to pay extensions because they are set up for US mail use only, says Jenny Hong of Unemployed-friends.com. Other states, such as Michigan, which uses online certification and direct deposit of checks, are known to be faster, says Ms. Hong.

How long is the extension?

Those eligible for unemployment insurance can expect to receive their checks through the end of November.

How will Congress pay for this extension?

Because it is categorized as “emergency spending,” it is not subject to congressional pay-go rules. Budget items subject to pay-go rules must have a predetermined funding source in order to be passed. However, the $34 billion will have effects that might help curb its impact on the federal budget deficit, which was projected at $1.6 trillion in February.

“Much if not all of the money will be spent, which increases economic activity,” explains Stanley Collender, a budget expert at Qorvis Communications in Washington. “And the budget deficit is probably shrinking, not growing, because we’ve gotten more of the TARP money back and corporate profits have been higher than anticipated,” says Mr. Collender, who expects the deficit will actually come in closer to $1.3 trillion this year.

What's new in the legislation?

Under the old law, individuals who used to have part-time jobs or took seasonal employment would see their benefit levels reduced when they went back on unemployment. Thus, it was not unusual for someone who had been receiving $500 a week to take a part-time job, and then when they returned to unemployment find that their benefit was now based on their temp salary.

Under the new law, they will be able to keep their higher benefit. But this law is not retroactive.

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