THE AMERICAN RESCUE PLAN ACT / UNEMPLOYMENT INSURANCE

The American Rescue Plan Act passed by Congress and signed into law by the President last week includes several key provisions concerning Unemployment Insurance, and extends several CARES Act programs.

The Rescue Plan Act:

*maintains the federally funded PUC weekly supplement of $300 per week for weeks beginning 3/14/21 and ending 9/6/21

*provides up to 53 weeks of federal UI benefits, up from 24. These benefits are all federally funded for both tax-rated and reimbursable employers.

*increases total number of weeks available to claimants to 79, up from 50

*continues the federal funding of the “waiting week” where applicable

*provides federal reimbursement to non-profit reimbursable employers of 75%, up from 50%, until 9/6/21. In states (including New York), that are already relieving a portion of benefit charges for reimbursable employers, net cost may be $0 for a period of time, unless modified by the states.

* provides $8 billion to states for UI programs, with discretion on how the monies are used. We are hopeful that much will be used to replenish the depleted UI trust funds and thereby reduce potential tax increases for tax-rated employers.

* provides $2 billion to states for fraud protection and detection, recognizing the significant impact that the filing of fraudulent claims has had on UI administration nationwide. (for more information on the fraud issue particularly in New York State, please view our webinar at the following link or view it on our website at – where we review the overall impact of the pandemic on unemployment insurance over the past year)

* extends federal funding of up to 100% of shared work programs through 9/6/21. The amount funded depends on the states and the provisions of the state-specific programs.

* exempts the first $10,200 of UI benefits from federal income tax (applies to taxpayers with incomes below $150,000) and applies to benefits paid retroactive to 2020. Note that claimants may still be responsible for state income taxes which determination will be made by the specific state involved.  As each employee’s situation is unique, we recommend referring employees to their tax professionals for specific advice.