The rules for unemployment insurance (UI) have largely returned to what they were before the COVID-19 pandemic when special programs were created to help those whose work was affected by the national emergency. If you're applying for it now, it's important to understand how UI works.

What Is Unemployment Insurance (UI)?

Unemployment insurance provides monetary benefits on a weekly basis to eligible workers who become unemployed through no fault of their own. The country's unemployment insurance system is run by the individual states, which generally set up their own eligibility criteria and benefits levels and pay the actual benefits. Still, it is overseen by the federal government (the U.S. Department of Labor), which pays administrative costs. Benefits are paid with funds collected for that purpose via federal and state payroll taxes.

If you quit voluntarily or were fired from your job for a just cause, that usually means you will not be eligible for unemployment. If a lack of available work has led to your unemployment and you are not at fault, you are likely eligible to collect. States also have requirements for time worked and wages earned that you must meet in order to receive benefits.

A Look Back: Unemployment Insurance in 2020 and 2021

As states closed down and businesses shuttered because of COVID-19, record numbers of the newly out-of-work applied for UI to help pay their bills. In the week ending March 28, 2020, for example, the U.S. Department of Labor (DoL) announced that 6.6 million new benefit claims were filed, compared to 3.3 million the previous week.

The CARES Act boosted the benefit amount that people could get, extended benefits, and made unemployment insurance available for groups of people, such as independent contractors, who were otherwise not eligible for UI. These benefits were made available through the Federal Pandemic Unemployment Compensation (FPUC) program, the Pandemic Unemployment Assistance (PUA) program, and the Pandemic Emergency Unemployment Compensation (PEUC) program.

However, undocumented workers were excluded from CARES Act benefits, even those who filed income taxes, and anyone filing a tax return together with an undocumented immigrant was also excluded. That meant that in families where just one member files using an individual tax identification number (ITIN), the entire family was ineligible. Some states and localities stepped up to provide help to undocumented immigrants to fill the void. Austin, Minneapolis, New York, Seattle, and Washington, D.C., for instance, set aside funds to give one-time aid payments to undocumented workers affected by the COVID-19 crisis.

All pandemic relief programs expired on or before Sept. 6, 2021.

How Unemployment Insurance Is Administered

Most states provide up to 26 weeks of benefits to unemployed workers to replace roughly half of their previous wages, up to a maximum benefit amount. Seven states update their maximum UI benefit weeks based on changed in their unemployment numbers. Three of these states—Florida, Kentucky, and North Carolina—currently provide up to 12 weeks of unemployment.

The amount of unemployment benefits varies widely by state, with weekly maximums ranging from $235 in Mississippi to $1,015 in Massachusetts.

How to Apply for Unemployment Insurance

To apply for UI, you must follow your state's guidelines, which you can link to via the DOL website, . Depending on the state, you can file a claim in person, online, or over the phone. When you file a claim, you must provide your Social Security number, contact information, and details about your former employment.

While every state has its own eligibility rules, there are a few universal steps to take to file for unemployment insurance, no matter where you reside. Before you apply, collect all the appropriate paperwork. Be prepared to file your address, telephone number, and your Social Security number. You will also need to provide the name(s) of your employer(s), addresses, telephone numbers, and your employers' identification numbers (EIN) from the past 18 months. You also need to provide your dates of employment and your earnings (from W-2s and pay stubs) for the past 18 months.

When you have all the necessary information, you can apply online—the fastest way to receive your benefits. As a general rule, you should file a claim with the state where you worked. not the state where you live. So if you work in New York but live in New Jersey, you will need to file for unemployment benefits in New York State. If you worked in a different state than the one where you live now or if you worked in multiple states, the state where you currently reside can help you find out how to file a claim with those other states.

The Bottom Line

Unemployment insurance can help you pay your household bills while you are looking for your next job. Keep in mind that the weekly benefit is designed to replace only a percentage of your wages, not the entire amount. But the sooner you file for UI, the faster you will receive your first payment.