Is Unemployment Insurance Retroactive — And How Does It Work?

Unemployed Americans were left adrift when the $600 unemployment benefit boost expired at the end of July.

To offer a replacement, President Donald Trump signed the “Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019,” making up to $400 in additional weekly benefits available to eligible out-of-work Americans.

The money comes from the Federal Emergency Management Agency, or FEMA. But delays in implementation of this program, called lost wages assistance, mean that some recipients will see some of this benefit paid retroactively, with checks arriving late to repay previous weeks’ worth of eligibility.

[Read: How Are Unemployment Benefits Taxed?]

Here’s what to know about when to expect these unemployment benefits and whether they’ll be paid retroactively.

Is Unemployment Insurance Retroactive?

Yes, unemployment insurance benefits are sometimes paid retroactively, even when we’re not in the middle of a global pandemic.

“Retroactive payment is a common occurrence in unemployment benefit programs,” says Indivar Dutta-Gupta, co-executive director of the Center on Poverty and Inequality at Georgetown University.

One common example: When an unemployment benefits application takes time to be processed, the out-of-work person may receive retroactive benefits dated back to when he or she became eligible.

When it comes to this pandemic-related lost wages benefit, retroactive payment may also make up for delays.

It turns out that implementing the provisions set out in Trump’s memorandum is time-consuming for many states, leading to time lags. That means unemployment insurance recipients aren’t earning their additional compensation for the weeks during which they’re technically eligible. To remedy that, many states are sending payments retroactively, dating back to Aug. 1 or when the previous unemployment boost expired.

But there’s a caveat: Whether you receive retroactive jobless benefits and how much you receive depends on your state and its choice of when and how to enroll in the new jobless benefits program.

“When different people get access to these funds will change a lot depending on what state they’re in,” says Melinda C. Miller, a professor who specializes in economic history, demography, labor economics and applied microeconomics at the Virginia Tech department of economics.

[Read: The Payroll Tax Cut: Here’s What It Means for You.]

How Much Will I Be Paid Retroactively Under the Lost Wages Assistance Program?

If you are eligible to receive the full amount of retroactive payments starting Aug. 1, expect additional unemployment benefits of $900 or $1,200 over three weeks, depending on your state, Miller says.

Here’s why there’s a range: The executive order authorized FEMA to provide grants to participating states, but there’s a cost-sharing component. In order to earn the $300 federal contribution, states need to contribute $100 of their own money, for a total of $400.

However, many states are using a workaround that allows them to count regular state unemployment benefits they’re already paying as their cost-sharing commitment. If you reside in one of those states, you’ll collect $300 weekly additional benefits.

The initial grants are only approved for three weeks, with additional funding potentially available afterward. “States, territories or the District of Columbia may make retroactive payments to eligible claimants for the weeks ending August 1 to August 22, 2020,” according to a fact sheet released by FEMA. “After the initial three-week obligation, additional weekly disbursements will be made on a weekly basis in order to ensure that funding remains available.”

So, if you receive an additional $300 weekly, you’d earn $900 over three weeks, to be paid retroactively. If you receive an additional $400, that amount is $1,200 over three weeks. Beyond that, retroactive payment may be available, but it’s not guaranteed.

How Will Retroactive Unemployment Compensation Be Paid?

The exact method and amount will depend on how your state doles out unemployment benefits.

For example, in New Mexico, lost wages assistance is available for recipients who were eligible from July 26 through Aug. 15. Payments will start the second week of September and be separate from your regularly weekly benefit payments, according to the New Mexico Department of Workforce Solutions website.

Am I Eligible for Retroactive Unemployment Insurance Under the Lost Wages Program?

Your eligibility to participate in the program and receive retroactive benefits depends on several requirements:

— You receive at least $100 in weekly benefits from a qualified unemployment benefit program such as regular unemployment compensation or pandemic unemployment assistance.

— You live in a state that applies for and is approved for the lost wages assistance program.

— You were eligible for the boosted payment starting Aug. 1. (If you were eligible later, you may receive a smaller payment.)

— You may be required to self-certify that your unemployment or partial unemployment is due to the disruptions caused by the COVID-19 pandemic.

If you’ve found a job recently, congratulations, and note that you may still be eligible for the retroactive unemployment boost payment. “Additionally, since supplemental lost wages assistance is retroactive, an individual who was previously unemployed or partially unemployed as a result of COVID-19, but now is employed may still be eligible for supplemental lost wages assistance for the period after August 1, 2020 until he or she regained employment,” says FEMA.

Most states are saying you don’t have to do anything additional to get that $300 or $400 paid retroactively, but keep your eye on what your state is doing and when you should see the funds.

[Read: Why Haven’t I Received a Stimulus Check?]

What Should I Do While I’m Waiting for My Retroactive Unemployment Benefits?

Experts suggest taking a wait-and-see approach when it comes to receiving retroactive benefits through the lost wages assistance program. There are still many questions and disparate state policies for how and when these payments will be disbursed. Information is continuing to roll out, but you can see whether your state was approved on FEMA’s website.

Additionally, the fact that the money is coming from FEMA while hurricanes, wildfires and summer storms slam separate parts of the country have some experts concerned that funding will run out quickly. “It’s going to be this weird race to the bank,” says Michele Evermore, senior researcher and policy analyst for the National Employment Law Project.

If you’re hurting for cash, it’s difficult to sit by without knowing when or how much-needed income will arrive. Unfortunately, that’s the reality many Americans are facing. To make ends meet, keep tabs on what your state is doing and look to utilize any federal or state programs for which you are eligible such as food stamps. Food banks and charities may help bridge the gap.

On a larger scale, you may want to lobby your representatives in Congress to get back to legislating. Says Evermore: “I would not necessarily count on (retroactive unemployment benefits) and I would contact my elected officials and tell them to do it legislatively, so it’s more certain.”

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