How Do I Know If I Qualify for Unemployment Benefits?

History shows us that no worker is immune to a weak job market. Chances are good you know a talented, hardworking employee who lost a job due to layoffs or downsizing. Maybe that person was you.

Fortunately, thanks to unemployment insurance, losing your job doesn’t have to completely drain your savings. But the rules around filing for unemployment benefits can often be confusing. If you’re out of work or unsure if you’re even eligible, we’ve got you covered. Below are answers to some of the most commonly asked questions about unemployment benefits.

How do I know if I qualify for unemployment benefits?

Whether you qualify largely depends on where you live, since the program that provides these benefits is a joint effort between the federal government and individual states. Unemployment insurance is mostly funded by state and federal payroll taxes, though they’re typically paid out by state governments. 

That said, in order to collect unemployment benefits—which many states will let you do for up to 26 weeks, provided you are actively looking for work—you have to meet some basic criteria, including:

You lost your job through no fault of your own. 

This one’s a biggie. Essentially, this means you were let go due to forces beyond your control, such as a company downsizing or closing. If you voluntarily leave your job or are fired, you are not eligible to collect benefits. 

Your state, however, may make some exceptions if you quit for “good cause“—although how that is defined could vary greatly by state. In some cases, that could mean you left because you were in unsafe working conditions, your employer failed to pay your wages, or you had to care for a sick family member. Under these circumstances, however, you’ll be asked to provide evidence that you tried to address your situation with your employer. Then it’ll be up to the state to decide if you qualify.

You met your state’s requirements for time worked or wages earned. 

Each state has rules that dictate how long you had to have been with your previous employer as well as how much income you had to earn to be eligible for unemployment benefits. A particular state might require you to have worked a minimum number of weeks earning at least a certain amount per week or year. In a nutshell, these requirements mean that if you get laid off from a relatively new job, you likely won’t be eligible for benefits.

You receive a W-2 tax and wage statement. 

Unemployment insurance eligibility is one of the differences between 1099 and W-2 employees. This effectively means that freelancers and independent contractors who receive 1099 statements aren’t eligible to file for unemployment benefits because their employers are not paying employment taxes during the time that the individuals are working.

However, part-time W-2 employees are eligible to file as long as they meet their state’s requirements for time worked or wages earned.

What disqualifies you from unemployment benefits?

Even if your employer has been contributing to unemployment benefits on your behalf, there are some situations in which you may not qualify for them.

If you quit your job

Most states will not grant unemployment benefits to you if you quit your job. So don’t plan on unemployment insurance if you’re giving notice to your boss because you’re going back to school, moving or getting married, for example.

If you get fired

If you lost your job because of performance issues or a policy violation, you probably won’t get unemployment benefits. You need to have ended your employment without any fault of your own. It’s one of the biggest differences between getting fired versus getting laid off.

If you’re a freelancer or 1099 employee

If you were self-employed, then you probably can’t get unemployment benefits. This includes freelance workers unless their business is incorporated and was paying into unemployment. 

How long can you collect unemployment?

How long you’re able to collect unemployment benefits will depend on what state you live in, but generally, it may be somewhere around 20 weeks. Once you’re on unemployment insurance, your state may require that you check in and answer questions, such as whether you were available for work, what job search activities you completed, and whether you declined any job offers. To make sure you stay eligible, search for your state’s unemployment rules so that you understand what applies to you. One place to start is benefits.gov, where you can enter your state in the search box or browse a list of states.

What is the average unemployment benefit payment?

How much you’re eligible to receive in unemployment benefits will depend on the rules of your state. Typically, states will look at your previous income to determine benefits, but be aware that many states have a cap on the amount you can receive. Even the highest-paid employee is subject to a maximum weekly benefit.

How long does it take to receive unemployment benefits?

Again, the answer varies by state, but there’s typically a brief waiting period sometimes known as ”the waiting week.” This is the first week you would be eligible for unemployment benefits before you receive your first payment.

Your state might pay you for your waiting week but only once you claim and receive four consecutive weeks of unemployment benefits. The takeaway here is that getting paid for your first week of unemployment isn’t always a given, so you should check your state’s rules carefully.

Also important to keep in mind: In order for a waiting week to be recognized, you have to first file your claim. So, it’s important not to delay in completing your unemployment paperwork once you become eligible.

Does a severance package affect unemployment?

Things like pay for unused vacation time or severance pay may affect your unemployment insurance eligibility or amount. The rules vary from state to state and can change over the years. It’s important to track your earnings and be prepared to report them to your state if necessary.

What can I do to prepare for (or deal with) reduced income?

A job loss may be an unexpected blow, but it doesn’t have to completely disrupt your finances. Engaging in some strategic financial planning can help make sure your financial goals stay on track while you find your next step. A good financial plan can adapt to whatever life throws at you.

A Northwestern Mutual financial advisor can help you create a plan that will withstand unexpected changes that come your way. By reviewing your financial goals and designing a plan that covers your short-term and long-term needs, your financial advisor can help you stay on track with all you wish to achieve in life—even when things don’t go as planned.