Cash Flow Review - Unemployment Insurance Benefits

The most pressing thing to do was do a cash flow review.   I had to take a look at incoming income and compare it against expenses, and ultimately create a new budget. 

What income did I have coming in?

Income:

• Work - since my husband was still working, I could count his income in my calculations.
• Unemployment - through California's unemployment insurance program, I would be entitled to some benefit.  The question was, how much and for how long?
• Severance -  I got two weeks of pay for each year of service.  I could apportion part of the severance and allocate it weekly or monthly to meet any expenses.  If our income could support our current expenses (with adjustments to current outflow), then I could possibly save the severance and use it for unexpected expenses.
• Other - could I find any part time work? Would any investments pay any dividends?  

Luckily, my husband was still working and so that put a lot of pressure off, but I had to see if there was a gap.  We needed my income and I didn't know if we could adjust our outflow to conform to his income only.

Unemployment, although small, was at least something.  I had talked to some other former co-workers that were affected and they complained about how little it was compared to their former salaries.  I didn't understand this complaint.  It was something.  Something was better than nothing.

If a person loses a job through no fault of their own (such as in my case with a layoff), then the California Employment Development Department's (EDD) Unemployment Insurance Program would provide weekly unemployment insurance benefits.  This is meant to enable people to cover basic life necessities while they conduct an active search for work.  It is not meant to cover each person's salary.  This insurance program is paid for by employers and the EDD administers the program.

What did I need to do or know about this?  Before filing a claim, I had to be aware of a few things:

1.  Eligibility: in order to receive benefits, claimants must meet certain eligibility requirements, such as receiving enough wages during each claimant's "base" period (explained below), be partially or totally unemployed through no fault of their own, be available for work, be physically able to work, and be actively looking for work.

• Wages to establish a claim:  when I file a claim, the EDD checks with the employer and the employer reports wages to the EDD.  The EDD then uses this  this information to decide if an individual earned enough wages in a base period to establish an unemployment claim. 

• What is the "base" period?  A base period is a specific 12-month period.  There are two methods for determining the base period, the standard base period and the alternate base period.
• The standard base period is the first four of the last five completed calendar quarters prior to the beginning of the claim.  For example, if a claimant files a claim that begins in April, May, or June, the claim is calculated based on wages paid between January 1 and December 31 of the prior year.
• The alternative base period is only used if there aren't enough wages earned in the standard base period and one meets the other eligibility requirements.   The alternate base period is the last four completed calendar quarters prior to the beginning of the claim. For example, if your claim begins in January, February or March, the claim is calculated based on wages paid  between January and December of the prior year. 

• What would be the weekly benefit amount?  The weekly benefit amount could be as low as $40 to the maximum of $450.   The weekly benefit amount is based on the wages earned during the base period of the claim.  Generally, to establish a claim I would have had to have earned at least $1,300 in one quarter of my base period  or $900 in my highest quarter and total base period earnings of at least 1.25x my high quarter earnings.

2.  How to file.   There are 3 ways to file a claim.  Online, by telephone or by mail.

• Online:   since I had access to a computer, the easiest and fastest way to file a claim was to apply online.    I went online here and applied.  I had to gather some information (notably the wage information for the standard base period), but it was a relatively easy and simple process. 
• Telephone:  there is a toll free number that one can call between 8 a.m. and 5 p.m. (PST) Monday through Fridays, except holidays.  For English use 1-800-300-5616.
• Mail/Fax: to file a claim by mail or fax, an application can be accessed online at www.edd.ca.gov/Unemployment, then filled out online and printed and then mailed.   I don't understand this. If one has access to a computer, he/she could just file online.  There is a reason why one would mail an application (perhaps if they only had access to a public computer such as a library, they would want to mail it, but how would they print out the application?  I would presume that one could just call the EDD and have them send an application, but this would delay the process.

3.  How long would it take to receive benefits?  Generally, there is a 7 day waiting period before I would receive any benefits. The EDD now issues a EDD Debit card to deliver unemployment benefit payments.  I had to activate the debit card, set up an account and then I was able to transfer the funds to my bank account.  I could also use the debit card on its own if I wanted to.

4.  What are the other requirements?  I know that every 2 weeks during my claim, I would have to certify that I still meet the eligibility requirements. 

5.  How long will benefits last? While a claim is effective for a year (I have a year to claim benefits), I would be eligible to receive between 12-26 weeks of benefits.  The number of weeks may vary depending on earnings during the base period.  Unfortunately, in the event it takes me longer than 26 weeks to find a job, I will not be eligible for federal unemployment extensions.

6.  Other:

• Would my severance or vacation pay affect my benefit amount?
• Thankfully, receiving severance will not affect my eligibility to receive benefits.
• In terms of vacation pay, whether this would affect my benefits depends on whether I was given a date to return to work.  If yes, then the amount paid is deductible from my benefit. However, this was not the case for me, so any amounts paid for vacation pay would not be deductible from my benefit.

• Would income tax apply to the benefits?  
• California State Income Tax:  no California income tax would apply to my benefits.
• Federal Income Tax: federal income tax would apply to my benefits.  I was able to elect to have EDD deduct my federal income tax liability from my benefit amount.

I was able to derive much of this information from the EDD site.   It's not an easy site to navigate, but a lot of information can be found there.  I just summarized some points here that were pertinent to my situation.