Trump’s proposed extra unemployment could amount to $300 a week instead of $400, and you may not qualify

Personal Finance

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You probably heard that President Trump signed an executive order to provide an extra $400 a week in unemployment benefits.

Be aware that it’s not a done deal. And, based on the contents of a Department of Labor memo sent out Sunday and reviewed by CNBC, that amount could actually end up being $300 weekly. There’s also no guarantee that everyone who’s unemployed and otherwise receiving weekly benefits would get anything.

Trump’s call for the extra unemployment money was part of a handful of executive orders he issued Saturday after negotiations for the next round of coronavirus relief fell apart in Washington a day earlier.

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With the unemployment rate above 10% and economic uncertainty persisting, lawmakers are still sorting out their differences over how best to help struggling households and businesses, as well as states and local governments.

For unemployment benefits, Democrats included a provision in the HEROES Act passed by the House to extend the $600 weekly extra that ended in late July. Republicans in the Senate proposed $200 in their HEALS Act. 

While the president’s $400 is right in the middle, it comes with some caveats. 

On top of questions about whether the executive order can legally stick and uncertainty surrounding its implementation, recipients would have to collect at least $100 weekly in other unemployment insurance to qualify for the boost.

This would eliminate eligibility for individuals who receive little in the way of benefits, unless states could boost what they pay in standard unemployment so that all recipients receive amounts above that $100 weekly threshold, said Michele Evermore, senior policy analyst for the National Employment Law Project and an expert on unemployment benefits. Given already-stretched budgets in some states, that could be a tall order.

Most states have unemployment benefit minimums below $100. Maximums range from under $300 to more than $1,200 a week in Massachusetts, which is the only state where the highest paid benefit is more than $800 weekly.

Additionally, Trump’s order called for states to chip in 25% ($100) of that $400. Based on the DOL memo reviewed by CNBC, states have two options to fund that share. They could count the first $100 they pay in weekly benefits to meet that requirement — which means the boost would amount to $300, not $400.

Alternatively, states could fund their share from either their own coffers or from funding they already have access to: The CARES Act, passed in late March, created a $150 billion coronavirus relief fund. However, much of the remaining money in that pot — $80 billion — already has been earmarked for ongoing costs by states even if it hasn’t yet been spent, Evermore said.

For the federal government’s $300-per-week share, Trump would use $44 billion from the government’s $70 billion Disaster Relief Fund — which typically is deployed in the wake of weather disasters and the like. The money would be administered by the Federal Emergency Management Agency, or FEMA. 

“How states could pay FEMA aid [to beneficiaries] through their unemployment insurance would be very difficult and take a lot of time,” Evermore said.

Eligibility for the extra federal benefits would be retroactive to the week that ended Aug. 1. The weekly increase would remain in place until Dec. 6 or the funding runs out, whichever happens first, according to the executive order.

The Committee for a Responsible Federal Budget estimates that the $44 billion would last five weeks.

The federal boost also would not be automatic. States would need to request the assistance. They also would need to have a system in place to deliver the money, which is no simple task, Evermore said.

“It’s incredibly complicated,” Evermore said. ”I’m really not sure how any of this would work within the framework of how states pay out benefits.”

(CNBC’s Jodi Gralnick contributed to this report.)

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