How the Stimulus Bill Affects You if You’re Unemployed

Posted April 28, 2009 in Labor and Employment by

Ask anyone who’s ever been unemployed and they’ll tell you that it seems as if our nation’s unemployment laws were written by people who have never ever actually been unemployed. Sure, many of the benefits sound good until you start adding up the associated costs of those benefits.

Take COBRA, for example, which gives many unemployed people the right to stay on their employer’s health-care plan for up to 18 months after leaving their job. We all read about how hard it is to get private health insurance, so that sounds like a great benefit, until you realize it could easily cost you and your family $1,000 a month in premium payments. When money isn’t regularly flowing into your bank account, it’s hard to imagine writing a large check each month for health-insurance coverage.

Another example: Your unemployment benefit–that check the state gives you each week–is taxable income. So the government writes you a check, then wants some of that money back. Ironic, isn’t it?

The recently passed stimulus package, more formally known as the American Recovery and Reinvestment Act of 2009, actually tries to make things financially easier for unemployed people. Among the changes:

  • The first $2,400 of unemployment benefits are free from federal taxes. Depending on how your state calculates income tax, this money may also be free from state taxes, too.
  • If you opt for COBRA health insurance coverage, the government will pay 65% of your health insurance premiums for the first 9 months you’re on COBRA. This applies to workers who lost their jobs between Sept. 1, 2008, and Dec. 31, 2009.
  • If you could be covered under COBRA but declined coverage, you have a second chance to sign up. The deadline to do this is April 18, 2009, so contact your former employer, or their benefits administrator, immediately.
  • People who apply for unemployment compensation on or before Jan. 1, 2010, will receive an additional $25 a week in benefits until their benefits are exhausted or until June 30, 2010, whichever comes first.
  • If you are on Supplemental Security Income, you’ll receive a one-time payment of $250.
  • People who file for unemployment on or before Dec. 31, 2009, will get more weeks of coverage. Workers in states with an unemployment rate of more than 6% get an 33 additional weeks of unemployment benefits, and workers in other states get 20 additional weeks of unemployment benefits.

If you are unemployed, these changes may not completely ease your financial burden. But they will put more money into your pocket for a longer period of time, and they’ll make it easier to obtain affordable health care. Pay attention to blogs like this, and the news and information from your state’s unemployment office, because many of these temporary benefits may be extended or made permanent.

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