Senate ‘HEALS Act’ Includes Important Fix to Pandemic Unemployment Assistance

While most will focus on its proposed changes to the $600 per week federal bonus for the unemployed, the HEALS Act — unveiled by Senate Republicans Monday — also includes an important technical change designed to minimize significant abuse of the Pandemic Unemployment Assistance (PUA) program. PUA is the unprecedented federal program that provides weekly unemployment checks to gig workers, independent contractors, and others with such limited work history that they would not normally qualify for state unemployment insurance (UI) benefits.  

Here’s how the summary of the provision in question reads:

Section 103 – Conforming eligibility for pandemic unemployment assistance to disaster unemployment assistance and accelerating appeal review

The CARES Act created the Pandemic Unemployment Assistance (PUA) program, modeled after the long-standing Disaster Unemployment Assistance (DUA) program, to provide support to those not traditionally eligible for state unemployment benefits. Under DUA, applicants can receive benefits immediately, but must provide documentation within 21 days of applying to substantiate prior employment or self-employment (or the planned commencement of employment or self-employment). The Department of Labor has determined this DUA provision does not apply to the PUA program, and this provision requires states to follow the same procedures for verifying eligibility for both programs.

In April, the Department of Labor issued guidance to states suggesting PUA “does not require proof of employment. Instead, PUA requires that the individual self-certify that one of the COVID-19 related reasons identified in section 2102(a)(3)(A)(ii)(I) applies to his or her situation.” That interpretation is at odds with how eligibility is determined under the Disaster Unemployment Assistance (DUA) program on which PUA is modeled. DUA similarly allows individuals to start collecting benefits via self-certification, but it disqualifies recipients if they do not submit evidence of prior employment within three weeks of starting benefits.

As I reviewed in May, the Inspector General of the Department of Labor warned the PUA program is at “significant” risk of “improper payments and fraud,” including due to claimants’ ability to “self-certify” prior wages used to determine their continued eligibility for benefits. Maryland’s Labor Secretary recently described how this practice left PUA open to over $500 million in fraudulent claims in just that state: “The PUA Program, in particular, allows individuals to self-certify that they are unemployed due to the coronavirus, eliminating the regular check-and-balance that exists under the regular state UI program, increasing the potential for fraud.” The HEALS Act addresses these concerns by conforming eligibility criteria under the PUA program with the DUA program. That is, PUA claimants would be expected to provide proof of prior work and thus their eligibility for PUA benefits within three weeks, or else their benefits would end.

PUA has been a major challenge for states to administer, in part because it is a complex new program that supports millions of individuals not previously known to state UI systems. Complicating matters further is the fact that PUA was started while states were paying historic numbers claiming benefits under regular UI programs. Expecting PUA claimants to provide proof of prior work will add to the program’s administrative burden, both for states operating it and individuals seeking its benefits.   

But as the response to this crisis continues, it’s not too much to expect unemployment benefit claimants to provide proof of prior work to continue qualifying for PUA benefits, which currently can last up to 39 weeks — and could be extended in the future. For many PUA recipients, the guaranteed minimum PUA benefit already exceeds their prior wages. All PUA recipients to date also have received the $600 per week federal bonus, and future PUA recipients will presumably receive further bonuses if Congress continues them. Permitting continued “self-certification” of eligibility for such long-lasting and significant benefits is simply an invitation to abuse, and the HEALS Act rightly insists on applying the same eligibility standard already used in the DUA program. Congress should include this commonsense reform in the next coronavirus relief bill it sends to the president.