Millions of Workers Will Have to Submit New Documents for Pandemic Unemployment Benefits in 2021

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The $900 billion stimulus bill passed by Congress this week extends the CARES Act's Pandemic Unemployment Assistance program by at least 11 weeks into March 2021. But it also adds a new verification process to curb fraud that could impact nearly 10 million people currently drawing from the program as well as new applicants in 2021.

As soon as the latest stimulus bill is signed into law, individuals currently claiming PUA benefits will have 90 days to submit documents proving their eligibility for the program. Failure to do so puts them at risk of having to return PUA funds provided after the bill's enactment.

It's not yet clear what the Department of Labor and state agencies will require as part of this verification process, says Employ America policy advisor Elizabeth Pancotti. Problems could arise given the sheer expansiveness of how people become eligible for the pandemic aid program.

PUA extends unemployment benefits to people who don't traditionally qualify, including self-employed, freelance and gig workers. These individuals may be able to prove that they are self-employed and lost income during the pandemic by providing 1099 statements of earnings history.

However, PUA also covers people directly impacted by Covid-19 in other ways, such as if they cannot work because they contracted the virus or are caring for a sick household member; they were deemed at risk by a health authority and directed to self-isolate; their workplace was shut down because of the coronavirus; they had a job offer rescinded; or they must provide full-time supervision to a child or dependent while schools and care facilities are closed due to the virus.

When it was originally established, people could self-attest that they were eligible for PUA — in other words, if they swore under the threat of perjury that they qualified for the aid, Pancotti tells CNBC Make It. Under the new requirement, it's unclear how, say, someone whose job offer was rescinded back in April and has yet to find new work, will prove that they should remain eligible for PUA in the new year. Will they have to dig up an old email thread with the company's HR department? What if the exchange took place over a phone call?

Pancotti adds that people currently receiving PUA into the new year should continue to certify and collect their benefits as normal, but recommends they send in their verification documents as soon as possible after the new requirements are determined by their state agency.

The new verification requirement is not retroactive — meaning if you self-attested for PUA in 2020, but do not submit required documents for continued benefits in 2021, you will not be expected to return any PUA funds you received this year.

People who apply to PUA for the first time starting January 31, 2021, will have 21 days to submit their verification documents.

Pancotti worries this additional burden on workers and state agencies could delay unemployment payments, especially to people newly eligible for PUA.

According to data collected by The Century Foundation, only three states (Colorado, Idaho, Oklahoma) are deciding new jobless claims on time, and just four states (Rhode Island, Minnesota, North Dakota, Wyoming) are paying out benefits on time, which is within 21 days per federal requirements.

The pandemic has already laid bare an underfunded and disinvested unemployment insurance network that has seen states processing record-high numbers of claims every week since March.

"More paperwork affects everything down the chain," Pancotti says.

The latest requirements are intended to curb elevated levels of fraud in the PUA program, which is particularly vulnerable as an entirely new program built in just a few weeks.

Under the $900 billion relief bill, PUA is extended for new applicants until March 14, 2021. People in the program who haven't exhausted their total 50 weeks of PUA by then can continue to draw benefits through the work week that includes April 5, 2021.

The latest stimulus package also extends Pandemic Emergency Unemployment compensation for people experiencing long-term joblessness for a total of 24 weeks, and provides an extra $300 per week for all benefits recipients.

Check out:

New coronavirus relief bill includes $600 stimulus checks, $300 enhanced unemployment insurance

Millions of unemployed Americans will get a $300 per week federal UI boost through March with new stimulus bill

Some workers will get an extra $100 on top of new $300 weekly unemployment boost

Workers overpaid in pandemic unemployment may no longer have to return the money

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