On August 13th FEMA released the notice to states enabling applications for grants for lost wages supplement payment assistance (LWA). The deadline for application is September 10, 2020. It does not appear that Congress will come to an agreement on a replacement for the $600 in supplemental UI payments provided under the CARES Act in Section 2104. The President’s order is the vehicle for additional payments. The House Ways and Means Committee provided a brief summary below.

Here is How it Works

THE EXTRA BENEFITS ARE RETROACTIVE TO AUGUST 1

TWO OPTIONS: $300 WITHOUT ADDITIONAL STATE FUNDS OR $400 WITH STATE FUNDS

Option 1: $300: States have the option of offering UI claimants an additional $300 per week in unemployment benefits without spending any additional state dollars.

  • FEMA has said they will match funding by considering the aggregate amount of existing state funding used to pay regular state unemployment benefits.

Option 2: States can offer claimants $400 by adding $100 in benefits through their own separate state funds or Coronavirus Relief Funds.

ALL CLAIMANTS WILL REMAIN ELIGIBLE WITH EITHER OPTION, SO LONG AS THEY MEET EXISTING REQUIREMENTS

  • All claimants under both regular state UI and the expanded CARES Act programs, such as those covering self-employed and gig workers, will be eligible for the extra benefit as long as they are receiving at least $100 a week as their normal benefit.
  • Claimants must self-certify that they are unemployed due to COVID.
  • States may use up to 5% for administration and for systems changes, also subject to match.

DETAILS ON HOW LONG THE FUNDING LASTS 

  • Funding will continue until the earlier of:

1) FEMA has expended $44 billion from the Disaster Relief Fund (DRF),

2) The DRF balance reaches $25 billion,

3) Enactment of legislation providing supplemental Federal unemployment compensation, or similar compensation, for unemployed individuals due to COVID-19, or

4) December 27, 2020.

  • FEMA expects this additional $44 billion from the Disaster Relief Fund to last about 5-6 weeks, depending on how many states participate.
  • To put this in perspective, in just the month of July, the extra $600/week cost $80 billion and has cost nearly $254 billion since it started in April. More than 30 million people are currently claiming UI benefits.

Other documents explaining the program include:

  1. The Executive Order
  2. UI PL 27-20
  3. Posting on the FEMA web site

This is a Federal/State program that is authorized and funded through FEMA and administered by state UI agencies by agreement.

We submitted a number of preliminary questions and received some answers (unofficial but being finalized) below.

  1. Q: If the amount to be paid to an individual with respect to a week claimed is less than $100 are they not eligible to be paid the additional amount?

A: The program is planning to consider claimants who are monetarily eligible for $100 and not otherwise disqualified to be eligible for the benefit – so it’s a one-time determination and not a weekly calculation.  Individuals who are not eligible for at least $100 will not receive the payment.

  1. Q: Will only the payments of $100 or more be used for the state share match? 

A: Yes – and they also have to have self-certified that they are unemployed due to COVID.

  1. How will the Lost Wages Assistance amounts  be accounted for so as not to be charged as regular unemployment compensation to employer accounts? 

A:  The accounting for these benefits will be completely separate and the funds will not flow through the state’s trust fund.

  1. Q: If a claimant is overpaid for a week of unemployment compensation or there is a determination of fraud with respect to the regular unemployment compensation claim, will that result in an overpayment with respect to the LWA? How will recovery of overpaid amounts and fraud prosecution be coordinated? 
  • Answer pending
  1. Q: Are LWA determinations appealable as other determinations under the UI grant? 

A: FEMA is ceding to the decisions on appeal for the underlying benefit.

We continue to work with US DOL, states, FEMA and employers to identify issues of concern in administration. If all states elected to participate in this agreement the $44 billion earmarked from the Disaster Relief Fund would be depleted quickly.