The Consolidated Appropriations Act, 2021 focuses on numerous unemployment insurance issues, particularly on extensions of provisions in the CARES Act and the Families First Coronavirus Response Act. Many of these extended provisions will expire in early 2021 and will need to be revisited by Congress.
Federally funded benefits:
The CARES Act provided total federal funding for regular extended benefits and this act will also provide total federal funding through the week before March 14, 2021.
Effect of $300 per week and the optional $100 additional payment:
The act provides a $300 per week supplement and a state option for a mixed earner benefit payment of $100 per week (for claimants with independent earnings of $5,000 or more in the prior taxable year). These payments are federally funded and in addition to regular benefits paid after December 26, 2020 and before March 14, 2021.
Effects of waiting week provisions:
Provisions are tied to administrative funding for states who waive the non-compensable waiting week. Any states who did not pay a waiting week received additional administrative funding and this action will result in an increased disbursement from state unemployment trust funds.
Pandemic Emergency Unemployment Compensation (PEUC):
The CARES Act comprised of PEUC, which grants benefits after they have been exhausted. This act raises the weeks of PEUC from 13 to 24 potential weeks on or before March 14, 2021 and terminated payment of PEUC for weeks after April 5, 2021. Additionally, this act requires that Extended Benefits (EB) be exhausted prior to paying out PEUC and provides for changes in weekly payments of PEUC based on the comparison of the weekly benefit amount in subsequent benefit years.
Federal funds in relation to reimbursing employers:
The CARES Act offers a 50% repayment to state UI trust funds for reimbursing employers. With this act, a 50% credit can be applied to lessen the amount due without requiring the full amount to be charged before receipt of credit.
Strengthen State UI trust fund solvency through federal funds:
As of January 1st, a total of 18 states have outstanding loans from the Federal Unemployment Account (FUA). States with outstanding loans will trigger a potential net increase in Federal Unemployment Taxes to be paid in 2022. Outstanding balances as of January 1, 2022 will reduce FUTA offset credit from 5.4% to 5.1%, which will increase FUTA tax rates for employers by 0.3%.
Waiver of Title XII loan interest may be sustained through 2021:
Typically, Title XII of the Social Security Act charges interest on outstanding loans but this interest was waived through December 31, 2020 due to the Families First Coronavirus Response Act (FFCRA). With this new act, interest will continue to be waived through March 14, 2021. Also, state UI contributions for Q1 2021 are due at the end of April 2021.
With the advent of COVID-19 vaccines and provision extensions, the UWC Strategy suggests that an additional bill will be required to address issues resulting from COVID and recession recovery. The Biden administration advises that it intends to propose expansive provisions. Our office will monitor COVID-19 updates closely and will send out additional announcements as we become aware of any updates. You can also review these updates on our website at https://www.thomas-and-company.com/covid-19/ too.