What you need to know about unemployment insurance benefits in Minnesota

We’ve gotten several questions about how the federal economic recovery package will effect unemployment insurance (UI) here in Minnesota and so here’s my two cents on what you need to know.

The need for unemployment insurance is high in Minnesota – MPR reports that Minnesota currently has more people on unemployment than in any other quarter in the state’s history.  Our state provides most eligible applicants with 26 weeks of state unemployment benefits.  However, many exhaust their state benefits before finding a job. In fact, the state is projecting that 4 out of 10 UI recipients will run out of their state benefits.

But that’s not the end of the story, or necessarily the end of your UI benefits. Here’s what you need to know:

[By the way, you can apply for unemployment insurance in Minnesota on-line. However, be warned that the process can be challenging, especially during times of heavy usage.]

1. Most unemployed workers who exhaust their 26 weeks of state UI benefits are eligible for federal extended unemployment benefits for up to an additional 33 weeks. This federal Emergency Unemployment Compensation (EUC) benefit was originally set to expire in March, but the stimulus package extends eligibility through the end of December. So that’s potentially 26 weeks + (up to) 33 weeks of unemployment benefits for Minnesotans.

2. There is more unemployment help on the way! Now that Minnesota’s unemployment rate has reached a certain threshold, an additional 13 weeks of unemployment benefits is triggered and will now be available through the Extended Benefits Program. That means some laid-off Minnesota workers will be eligible for state UI benefits (26 weeks) + Emergency Unemployment Compensation benefits (33 weeks) + Extended Benefits (13 weeks). That’s potentially 72 weeks of unemployment. Check the Minnesota unemployment insurance website next week for more details on how to access these additional 13 weeks.

3. The economic recovery package funds a $25 per week increase in unemployment for workers receiving either regular state benefits or federal extended unemployment benefits through the remainder of 2009.  Approximately 331,000 Minnesotans will benefit from this provision. The supplemental payment will automatically begin appearing in unemployment checks the week of March 15.

4. Under the economic recovery package, the first $2,400 of unemployment benefits received in calendar year 2009 (reported in tax year 2010) will not be subject to federal income tax.

There is also new help for the state. The state is potentially eligible for a maximum of $151 million in one-time incentive payments and increased administrative funding for Unemployment Insurance – if Minnesota adopts reforms that expand access to UI benefits, as specified in the Unemployment Insurance Modernization Act. The state has already adopted some of these reforms (allowing part-time workers who are laid off to be eligible for benefits, for example). State legislation is in the works to adopt the rest of the required reforms (SF1197/HF1227). The reforms would expand UI benefits to more workers, so if the state complies and adopts the reforms, that’s good news for Minnesota workers.

The newly signed federal economic recovery package also shifts funding for federal extended unemployment benefits entirely to the federal government for the remainder of 2009 (previously states have had to pay 50 percent of the cost of federal extended benefits).  That means less financial pressure on the state to pay for UI.

-Katherine Blauvelt

About Katherine Blauvelt

Katherine Blauvelt served as the Minnesota Budget Project’s policy analyst from 2007 to 2009.
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