22 million Americans filed for unemployment benefits in mid-April 2020 because of COVID-19 crisis. For the first time, independent and self-employed workers are eligible for unemployment insurance thanks to COVID-19 emergency assistance.

Here’s a look at how unemployment insurance benefits work for the self-employed with recently updated guidelines. 

The CARES Act, for Self-Employed Workers

Passed by Congress in late March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a comprehensive relief plan for individuals and businesses in the wake of the COVID-19 crisis. This plan expands unemployment benefits and sick leave for full-time workers and extends benefits to the self-employed, independent contractors, and gig workers who were traditionally excluded from these programs.

The CARES Act offers expanded coverage by getting rid of barriers to unemployment insurance in a few areas:

Broader eligibility
Employers pay into state funds for unemployment benefits, and since self-employed individuals typically don’t operate with employees, they often bypass this program and surrender eligibility. Contractors working under 1099s—even if they were long-standing contributors to a company—were not considered an employee and would therefore not be eligible for unemployment. 

In the new ruling, self-employed workers are acknowledged by previous income, just like full-time workers.

Waiting periods
In a typical unemployment benefits application cycle, the period between your last working day and when you can file your first claim is typically known as your “waiting week.” As part of the CARES Act and expanding unemployment benefits for the self-employed and full-time workers, states have been incentivized to waive this period. 

Benefits typically withheld during this week will be financed at a federal level, but workers will need to apply for assistance as soon as possible within their state guidelines. The waiting week does not include processing time, which likely increase with the influx of recent applications. 

$600 weekly increase in benefits
The amount you’re paid by unemployment insurance is determined by your application and set at the state level. Most workers find their packages to reflect about 50% of their former salary

Under the CARES Act, eligible individuals can collect an additional $600 per week. This additional $2400 per month will be available through July 31st, 2020. 

Longer periods to claim benefits
Prior to the passing of the CARES Act, most state-set limits for claiming benefits maxed out at 26 weeks. With these new additions, if you’re still looking for comparable work after six months of unemployment, you’re eligible to submit claims for 13 more weeks (about three months).

How to Apply for Benefits

Because of the new processes, some self-employed Americans are struggling to get their benefits. Many states are still updating their systems to accept the new documentation required for filing a claim. 

If your state’s unemployment office is prepared to accept applications from self-employed filings, start your claim by locating their digital portal in the state where you worked. If you live in a different state than your former employer is based (or worked in multiple states), consult with your home state’s unemployment office.

To complete your application, you’ll want to gather your contact and banking information, as well as materials to document your recent assignments, clients, or gigs. 

You may also be asked if you’d like taxes withheld from your unemployment check, so keep in mind that you’ll be responsible for federal income tax as a part of your benefits allowance. 

Part-Time Work While Receiving Unemployment Benefits

Self-employed people get income differently from full-time employees. You’ll need to express need based on your normal assignment load. 

Similar to working a part-time position, if you’re trying to work your reduced client load, you need to report any income on your weekly claims. Follow your state’s guidelines.

These systems are new, so it will take patience to navigate them. Overall, it’s a step in the right direction for self-employed Americans to be offered unemployment benefits to support their families.

When you’re faced with impossible financial circumstances, knowing your options can provide comfort and empowerment. And you only need pen, paper, bank statements, a phone, and patience. Here are a few tips on how to prioritize bills.

Understand Your Finances

To prioritize, you need to know what you’re working with. Balancing the scales is all about making sense of income and expenses. The more knowledge and control you have over your financial resources, the better equipped you are to make smart financial decisions.

Keeping track of every charge in a given month, averaging variable costs, and payments due dates are good places to start. 

Go through your bank statement with a fine-toothed comb. Larger, fixed charges like rent will stand out, but take note of smaller expenses that can add up, like your gym membership or streaming services, too. To estimate variable costs like gas or utilities, take an average of your last 2-3 months of spending.

Once you have a complete picture of your income and expenses, make a timeline. When do you receive income and how often? When are your bills due? 

Prioritizing which bills to pay first is all about seeing what’s most urgent and how much is needed.

Prioritize Expenses for Basic Needs

An emergency budget means one thing: prioritizing what matters most and cutting nearly everything else. Shelter, food, utilities, and healthcare are at the top of that list. 

Next up are services that keep you accountable to your family and job—transportation, your phone, and the internet. After that, look at expenses that can negatively affect your credit if they go unpaid. 

Here’s how you can approach your top three categories as you’re prioritizing which bills to pay first:

Owners are in a better position than renters during tough times. Lenders can foreclose on your home after a period of nonpayment, but it’s a much longer process than being evicted for skipping out on rent.

If you’re struggling to make rent, reach out to your landlord. If you have a strong payment history may find that landlords are willing to accept a few smaller payments or even defer payments.

Needless to say, when prioritizing bills, feeding yourself and your family is at the top of the list. But be honest with yourself on how much you’re spending. Usually shopping for yourself is the best way to save on groceries. Buy store brands, and pair cheap pantry staples like rice, beans, and pasta with seasonal produce.

Like your grocery budget, it’s possible to cut back on utilities when you need to. What can you do if you’re stuck with a big bill, but can’t pay right now. The worst thing to do is ignore it and hope your service will stay on. Like with your housing, it pays (sometimes literally!) to be communicative and honest. If you think you’re going to struggle with an upcoming payment, contact your provider to negotiate a rate or plan. 

Adjust Your Payments

When you’re living on a small budget already and your pay gets reduced further, you may not have convenience spending to reduce. With the strategies below, we’ll focus on what you can do right now to prioritize your bills. 

1. Ask to reduce your services
Shaving off excess on your larger expenses is a great way to reclaim some cash. Mobile and internet providers are great targets. You might be able to save $20 or more on your phone bill simply by dropping your roaming data plan. If you need a longer-term solution to recoup funds, consider downgrading your devices, as well.

2. Shop around for better prices
Being ruthless with your budget also means a lot of reassessing where your money is spent. For providers that generally offer a similar product, like car insurance or the internet, it’s worth it to see what offers are in the market.

3. Change your billing date
Adjusting the day a recurring payment is drafted can make a huge difference in your plan to prioritize your bills. Spreading billing days out can keep you from spending as much money at once, or schedule all your bills to align with your pay schedule can protect you from an overdraft. A simple phone call to your provider should be enough to get you started.

Financial emergencies are always hard. These are tips to help save a few bucks here and there, but they’re not cures for hard times. Every penny counts. 

If you recently lost your job to the impacts of COVID-19, check out what unemployment benefits your state offers.

If you’re one of the millions of Americans who lost their jobs to the impact of COVID-19, our heart goes out to you. It’s an uncertain time, but unemployment insurance can help ease the pressure.

Most Americans who lost their jobs are able to take advantage of unemployment insurance to help make ends meet until they find new work. This guide is designed to help answer all your questions about unemployment insurance.

What is unemployment insurance and how does it work?

Unemployment insurance is a government program paid into by taxpayers and employers to insure income for people who lose their jobs. They’re paid wages to help keep them afloat while they look for work. Each state is in charge of its own unemployment programs with its own eligibility requirements, benefit allocations, and payment duration.

Do I qualify for unemployment insurance?

Not every jobless person can collect unemployment insurance. State governments define specific requirements for eligibility, but at a high level, the Department of Labor has three rules for determining who qualifies:

  1. You must be available, able, and searching for work
    Your unemployment benefits are contingent on your ability to find another job. To get paid, you’ll need to provide weekly or bi-weekly evidence of your job search: applying to jobs, attending resume-building seminars, interviewing, etc.You can’t collect benefits, if you’re not looking. Some states also require individuals who collect unemployment benefits to accept a position they’re offered, if it meets state standards.
  2. Your job loss must not be your fault
    If you didn’t quit your job or have reason to get fired, you probably meet this requirement. If you were forced to abandon your job or falsely terminated, you may also be able to claim benefits.
  3. You meet state’s requirements for minimum hours worked
    Requirements differ by state, but in short, you’ll need to have logged a specific number of hours per week at your job to be able to draw on unemployment benefits. This can be a little fuzzy, but rest easy that the loss of a long-term, full-time position probably qualifies. 

How much will I be paid during unemployment?

Unemployment benefits are determined by your last job’s wages. Most states offer roughly 50% of your former earnings for a maximum of 26 weeks. 

Support for workers in the Coronavirus Aid, Relief, and Economic Security (CARES) Act gives workers an additional $600 per week through July 31st and a 13 week extension of normal state-delivered support.

Some states offer benefits calculators to help you plan while your application is processing, but nothing is for sure until you’re approved. You’ll be able to find resources on your state unemployment website. 

How do I apply for unemployment benefits?

You’ll start your claim by locating the digital portal for the unemployment office in the state where you worked. If you live in a different state than your former employer is based (or you worked in multiple states), consult with your home state’s unemployment office to determine where you should apply.

To complete your application, you’ll want to gather your contact and banking information, as well as materials to document your recent employment history:

You may be asked about withholdings from your unemployment checks. While it may be tempting to wait, generally, withholding the money is the best option.

What happens after I apply?

After you’ve filed your claim, you’ll receive a confirmation email and an eligibility notice confirming that you qualify. To continue collecting unemployment benefits, you’ll need to submit an additional claim every week or two through your eligibility period. 

This is where you’ll be sharing information about your job search activities, including positions you’ve applied for, interviews you’ve attended, and any offers you’ve turned down. If you do any part-time work while submitting claims for assistance, you’ll need to report those earnings.

How long does it take to get paid?

Again, these details will vary by state. Depending on how quickly you apply, you may or may not be affected by a short waiting period before collecting payment. Many states require a week of downtime after you’ve lost your job, and high volumes can increase the amount of processing for your application. After your claim has been approved, expect to receive your first deposit within two to three weeks. It’s best to apply as soon as possible after a layoff. 

How long can I collect unemployment insurance?

Although individual states’ unemployment programs determine how long you can collect unemployment, generally, you’ll find that most states provide benefits for half a year or 26 weeks. 

Extenuating circumstances can create opportunities for additional benefits; COVID-19 relief programs will extend unemployment insurance by an additional 13 weeks. 

I received a severance package. Am I still eligible? 

If you meet the Department of Labor’s eligibility requirements around job loss and hours worked, you’re still in the clear. 

Your severance package and any vacation time you’re paid out will be factored into your benefits allocation, but neither disqualifies you from collecting payment through unemployment insurance.

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Are you the person you want to be?

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I first met David Coulter earlier this year while discussing the vision and strategy of Varo with Warburg Pincus. Recently, I sat down with Dave to talk with him about the state of the banking industry and his involvement with Varo.