Will the HEALS Act Change Unemployment Benefits?

Five months down the road, and there’s still no end in sight to the Covid-19 crisis. With millions claiming unemployment benefits, the financial impact of the coronavirus pandemic is overwhelming. Since March, a staggering 42 million people have filed for welfare. The latest stats from the Bureau of Labor Statistics show that unemployment is now at just over 11%.

To help the unemployed get through the crisis, the CARES Act has been topping up welfare by $600 a week. But that federal money stopped on July 31. So, if you’re unemployed, you’re facing months of uncertainty. The extra money may have stopped, but the bills certainly haven’t. 

If you’re currently unemployed, help could come in the HEALS Act. This $1 trillion stimulus package proposes to boost jobless benefits until the end of the year. The HEALS Act change to unemployment would give an extra $200 a week and replace up to 70% of lost wages.

How could the HEALS Act change unemployment for you? What extra benefits could the HEALS Act give you if you’re out of work? 

What is the HEALS Act?

The HEALS Act is a proposal to enhance welfare benefits after the end of the CARES Act. If approved, the bill would change unemployment by topping up regular benefits by $200 a month. Of course, this is a massive cut from what the CARES Act gave. But, it’s a compromise between both parties to assist anyone claiming unemployment.

Related reading: What to do when unemployment runs out.

How the HEALS Act Changes Unemployment

Let’s look in detail at what changes the HEALS Act could mean for you if you’re receiving unemployment benefits. There are two significant ways the HEALS could change unemployment: 

  • Unemployment enhancement
  • Wage replacement

The HEALS Act — Unemployment Enhancement

Under the HEALS Act, anyone receiving unemployment benefits will get a $200 enhancement. This welfare top-up works in a similar way to the $600 extra payment that ended July 31. If you’re claiming unemployment, you continue to receive state unemployment insurance. Then, federal money will add an additional $200. 

According to official figures, the average weekly unemployment benefit payment in the US is $378. Depending on where you live, this could be nearly $500 in Washington but a meager $44 in Oklahoma. 

Since the start of the Covid-19 pandemic, spending on unemployment has skyrocketed. Statistics released in July show the impact that unemployment payments have had on the economy. In the three months before lockdown orders in March, average spending was $2.8 billion. But in May 2020, unemployment benefits topped almost $24 billion — mostly due to the additional $600 in the CARES stimulus package.

The HEALS Act — Wage Replacement

The $200 financial boost is only part of what the HEALS Act proposes to change with unemployment. The other part is to provide aid to replace 70% of people’s lost wages. The plan is that by October, the wage replacement scheme would be in place of the $200 top-up.

How much would you get in unemployment benefits? 

The amount you receive would depend on previous earnings. Also, the total boost to unemployment would vary from state to state. For example, each state has limits on how much they pay in benefits. 

Let’s look at two scenarios of someone living in Washington, D.C., where the maximum weekly unemployment benefit is currently $444. 

Unemployed worker #1 used to earn, on average, $54,000 a year. So, they still qualify for the maximum benefit of $444 a week. However, this is less than 42% of their wages. For worker #1 to get their 70% replacement wage, they need to get an additional $282 a month.

Unemployed worker #2 brought home a salary of $106,000 annually before getting laid off. They also qualify for the maximum unemployment payout of $444. But this is just 21% of their wages. But 70% of their salary would be $982. But because the HEALS Act says that extra payments can be more than $500, worker #2 couldn’t receive 70% of salary under the wage replacement scheme.

Will the HEALS Act to Change Unemployment Work?

Although the idea of replacing up to 70% of wages sounds good, the scheme has many critics. 

For example, it will be challenging for states throughout the country to reprogram their systems in time. This could mean that systems aren’t in place by October 5 to calculate new unemployment benefit changes. Some reports suggest that it took 30 days to roll out the CARES Act welfare benefits — and that was with a flat rate. 

Another monkey wrench in the works is the fact that not everyone has a stable employment history. Think of gig workers, freelancers, or the self-employed who may have seasonal earnings. Also, many of these workers don’t usually qualify for unemployment and may lack the necessary documents.

To ensure that the HEALS Act works for everyone, some lawmakers propose that the government works out a flat rate. For example, on average, $310 a week would be the average needed to finance the 70% wage replacement scheme. 

Other Proposals in the HEALS Act

The HEALS Act is similar in many ways to the HEROES Act, which the House passed in May. However, discussions on the HEROES Act hit a brick wall and probably won’t make it through the Senate.

What other provisions does the HEALS Act include? Here are a few highlights:

  • A second $1,200 stimulus check for eligible taxpayers
  • $500 in stimulus payment to the dependents of taxpayers, regardless of their age or number in the household
  • More funding for Covid-19 testing
  • $100 billion for education funding
  • Liability protection for businesses against coronavirus-related lawsuits
  • Tax deductions for meals
  • A back-to-work bonus of $450 to re-hire workers
  • $2 billion to upgrade unemployment insurance systems

Heals Act Unemployment Change: What it Means for You

The HEALS Acts could throw unemployed folks a financial lifeline until the end of the year. Whether the Senate passes the bill in its present form remains to be seen. However, most people agree that some changes to unemployment are necessary to boost benefits — at least until the economy gets back on its feet. 

If you’re struggling to get by on unemployment, you probably need help now. Find out what additional financial aid is available near you to pay for your day-to-day needs. You could also check out some resources on how to work from home during Covid-19 if you’re unemployed.