Pandemic Emergency Unemployment Compensation (PEUC) During Covid

What Was Pandemic Emergency Unemployment Compensation (PEUC)?

Pandemic Emergency Unemployment Compensation (PEUC) was an emergency program designed to help Americans affected by the COVID-19 pandemic by extending the number of weeks the unemployed could collect benefits. It was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion coronavirus emergency stimulus package signed into law by former President Trump on March 27, 2020.

After a series of extensions, the program expired on September 6, 2021. In total, an additional 40 weeks were added to the original 13 weeks of extended benefits.

Understanding Pandemic Emergency Unemployment Compensation (PEUC)

The CARES Act established the Pandemic Emergency Unemployment Compensation (PEUC) program to allow people who had exhausted their unemployment compensation benefits to receive up to 13 additional weeks of benefits, provided they were "able to work, available to work, and actively seeking work."

Benefits under the PEUC program were due to expire on Dec. 31, 2020 but were extended to March 14, 2021, and the number of weeks that an individual could claim PEUC benefits was increased from 13 to 24 by the Consolidated Appropriations Act (CAA) of 2021. The American Rescue Plan Act of 2021 further extended the PEUC 29 weeks for up to 53 weeks through Sept. 6, 2021.

States were required to offer flexibility to applicants in meeting PEUC eligibility requirements related to "actively seeking work" if an applicant's ability to find work was affected by COVID-19. Individual states offered guidance on reporting requirements. Some states, for example, allowed you to answer "Yes" to the question: "Did you look for work?" if you filed due to COVID-19 and didn't actually look for work.

Unemployment Programs Created By the Cares Act

In addition to the PEUC program, the CARES Act extended unemployment benefits through two other initiatives: the Pandemic Unemployment Assistance (PUA) program and the Federal Pandemic Unemployment Compensation (FPUC) program. Both programs also expired on Sept. 6, 2021.

Pandemic Unemployment Assistance (PUA)

Pandemic Unemployment Assistance (PUA) was a program that temporarily expanded unemployment benefits eligibility to self-employed workers, freelancers, independent contractors, gig workers, and part-time workers impacted by the coronavirus pandemic in 2020 and 2021. PUA was designed for workers who were not typically eligible for unemployment insurance benefits. The program was extended, most recently by the American Rescue Plan, and expired on Sept. 6, 2021. It had originally been set to expire on Dec. 31, 2020.

Those eligible for PUA had to provide self-certification that they were able and available to work and were unemployed, partially employed, or unable or unavailable to work due to a situation related to COVID-19.

Federal Pandemic Unemployment Compensation (FPUC)

The Federal Pandemic Unemployment Compensation (FPUC) program provided an additional $600 weekly to unemployment benefits, but the benefit expired on July 31, 2020. However, in late December 2020, FPUC was modified and extended as part of the CAA and later by the American Rescue Plan Act to provide an additional $300 per week in benefits. The funds were available for any weeks of unemployment beginning after Dec. 26, 2020, and ending on or before Sept. 6, 2021.

The reauthorization meant that an extra $300 per week would automatically be added to unemployment benefits. However, the new FPUC additional benefit was not payable during the gap from July 31, 2020, to Dec. 26, 2020. In other words, the $600 in extra money that was added to unemployment benefits ended on July 31, 2020, and the $300 didn't kick in until after Dec. 26, 2020.

Sources: H.R. 748, U.S. Department of Labor, H.R. 1319

Income Tax Relief Under the American Rescue Plan Act

The American Rescue Plan Act of 2021 provided additional relief to middle- and lower-income taxpayers by waiving federal income taxes on the first $10,200 of unemployment benefits received in 2020. This relief applied to benefits received through both state and federal unemployment programs for individuals or couples with a modified adjusted gross income (MAGI) of $150,000 or less in 2020.

States could choose to conform to the federal exemption or require that all taxes be paid. Several states did not conform to the federal exemption, but they already had laws that provide either full or partial unemployment compensation tax breaks.

Special Considerations

States were allowed considerable flexibility to amend their laws to provide unemployment insurance benefits in several COVID-19-related situations. They could choose to pay benefits, for example, when:

• An employer temporarily closed due to COVID-19, preventing employees from going to work
• A person was quarantined and anticipated going back to work after the quarantine was over
• A person stopped working due to a risk of COVID-19 exposure or infection, to care for a family member, or to home-school their children

The Bottom Line

In response to the unprecedented COVID-19 pandemic, which forced businesses to close and workers to stay home, governments around the world implemented emergency measures and financial stimulus in order to blunt the economic impact. In the U.S., Pandemic Emergency Unemployment Compensation (PEUC) was authorized under the CARES Act, extending unemployment benefits by up to 53 weeks after regular unemployment ran out. The program, which began in Mar 2020, was well-utilized but expired in September of 2021.