Updated March 12, 2020
COVID-19: Social Insurance and Other Income-Support
Options for Those Unable to Work
Overview
Unlike some federal or state programs, UC and DUA have
There is uncertainty about how the Coronavirus Disease
the ability to rapidly respond and provide immediate
2019 (COVID-19) may spread in the United States; what
income support. Thus, Congress may consider amending or
measures federal, state, or local governments may take to
expanding current unemployment benefits for individuals
mitigate the spread; and the possible effect on individual
unemployed due to COVID-19. For example, the DUA
income security from both. This In Focus provides an
authority could be a model for responding to public health
overview of existing federal and state government social
emergencies. More generally, in response to the 2007-2009
insurance programs or options that may be implemented
recession, UC benefits were temporarily augmented and
relatively quickly to provide financial assistance for those
extended, with some costs temporarily assumed by the
unable to work due to COVID-19 from (1) their own
federal government.
illness; (2) exposure leading to quarantine; (3) illness of a
close family member or school closures that may require
Workers’ Compensation
long-term caregiving; or (4) unemployment resulting from
Every state has a workers’ compensation system that
business closures.
provides wage-replacement and medical benefits to persons
who are injured, become ill, or die in the course of
Existing Social Insurance Programs
employment. There is no federal requirement that states
have workers’ compensation systems and no federal
Unemployment Compensation and Disaster
oversight of state workers’ compensation systems. The
Unemployment Assistance
federal government administers workers’ compensation for
The joint federal-state Unemployment Compensation (UC)
federal employees under the Federal Employees’
program provides income support through UC benefit
Compensation Act (FECA) and for longshore and harbor
payments. Although there are broad requirements under
workers and several other groups of private-sector
federal law regarding UC benefits and financing, the
employees, such as overseas federal contractors, under the
specifics are set out under each state’s laws. States
Longshore and Harbor Workers’ Compensation Act
administer state-funded UC benefits with U.S. Department
(LHWCA).
of Labor (DOL) oversight, resulting in 53 different UC
programs operated in the states, the District of Columbia,
While the state programs and the FECA and LHWCA
Puerto Rico, and the Virgin Islands. To receive UC
programs share similar features, each program operates
benefits, claimants must generally have been laid off
under its own laws and regulations. However, nearly all
through no fault of their own; have enough recent earnings
private-sector workers in the United States are covered by
(distributed over a specified period) to meet their state’s
some form of workers’ compensation. Coverage of self-
earnings requirements; and be able, available, and actively
employed individuals and certain other classes of workers
searching for work. The UC program generally does not
varies by program. The diffuse nature of workers’
provide UC benefits to the self-employed, those who are
compensation makes it difficult to provide general
unable or unavailable to work, or those who do not have a
information on how any given program would respond to
recent earnings history. Individuals who are laid off for
cases of workers contracting COVID-19 in the workplace.
reasons related to COVID-19 would be subject to UC laws
regarding benefit eligibility in the state where the previous
A worker who contracts COVID-19 as a direct result of his
work was performed. Individuals who are unavailable for
or her job, such as a healthcare worker who contracts
work due to COVID-19 (e.g., because of a quarantine, or
COVID-19 after treating a patient, would likely be covered
caregiving for sick or quarantined family members) may
by workers’ compensation and eligible for benefits.
not meet state requirements regarding being able and
However, a person who contracts COVID-19 through
available for work.
casual contact with a coworker or other person that happens
to occur in the workplace may not be covered, as it could be
Disaster Unemployment Assistance (DUA) provides
argued that the risk of this person being exposed to
federally funded unemployment benefits to individuals who
COVID-19 was not related to, or peculiar to, the
are unable to work as a result of a federally declared
individual’s job. Ultimately, such compensation decisions
disaster and are otherwise ineligible for regular UC
would have to be made by the specific workers’
benefits; however, the current statutory definition of “major
compensation programs and may vary across programs.
disaster” (42 U.S.C. § 5122[2]) for the purposes of DUA
Workers’ compensation would not generally be expected to
does not include a disease outbreak. Thus, DUA will not be
provide any benefits to a person who is unable to work
available under current law in response to COVID-19.
because of a quarantine order unrelated to his or her
employment.
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COVID-19: Social Insurance and Other Income-Support Options for Those Unable to Work
State Temporary Disability Insurance and Medical
Internal Revenue Service guidance could clarify whether
Leave Insurance
COVID-19-related expenses (outside of direct health
Temporary Disability Insurance (TDI) and Medical Leave
expenses) would be included as being withdrawn on
Insurance (MLI) are state-mandated insurance programs
account of hardship. Hardship distributions are subject to
that provide time-limited cash benefits to qualified workers
the 10% penalty unless they qualify for an exemption. In
who generally are unable to work due to nonoccupational
addition, some employer-sponsored plans permit employees
illnesses or injuries. Workers qualify for benefits by
to take out loans (up to a statutory maximum) from their
meeting minimum work or earnings requirements and, in
retirement accounts.
most cases, by serving a nonpayable waiting period (usually
one week). Benefits replace between 50% and 90% of a
In response to certain past federally declared disasters,
worker’s pre-disability earnings (up to a maximum amount)
Congress has waived the 10% penalty for withdrawals for
and are provided for up to 12-52 weeks. Where available,
disaster-related expenses. A provision in Division Q of the
state TDI/MLI programs cover nearly all private-sector
Further Consolidated Appropriations Act, 2020 (P.L. 116-
workers and, in some cases, state and local government
94) allowed for penalty-free distributions up to $100,000
workers. Federal workers are not covered by TDI/MLI, and
for individuals who lived in an area that had a major
self-employed individuals may elect coverage in some
federally declared disaster from January 1, 2018, to 60 days
states. Currently, TDI/MLI programs operate only in
after the enactment of the legislation on December 20,
California, Hawaii, New Jersey, New York, Puerto Rico,
2019. While no public health incident has been declared as
Rhode Island, and Washington State.
a “major disaster” under the Stafford Act, if the President
were to declare COVID-19 a major disaster, Congress
In general, covered workers who meet the state’s minimum
could extend the recently expired penalty waiver provision,
work or earnings requirements (i.e., insured workers)
providing penalty relief for COVID-19-related retirement
qualify for TDI/MLI benefits if they become unable to
account withdrawals. In 2019, 36% of U.S. households had
work due to COVID-19 illness and satisfy the waiting
an IRA and 43% of civilian workers participated in an
period requirement (if any). However, insured workers who
employer-sponsored defined contribution retirement plan.
are quarantined due to COVID-19 but who are not ill may
not qualify for TDI/MLI benefits unless the state
Related Resources and References
specifically permits them to do so. Historically, the federal
CRS Report R46219, Overview of U.S. Domestic Response
government has played no direct role in the operation of
to Coronavirus Disease 2019 (COVID-19).
TDI/MLI programs, which are established and funded via
state laws. That said, federal law permits states to withdraw
CRS Report RL33362, Unemployment Insurance:
employee contributions (if any) from the state’s
Programs and Benefits.
unemployment fund to finance TDI/MLI benefits. Congress
could permit states to use employer UC contributions to
DOL, Comparison of State Unemployment Laws 2019,
finance benefits; however, this option would likely assist
https://oui.doleta.gov/unemploy/comparison/2010-2019/
only those states with existing TDI/MLI programs.
comparison2019.asp.
Other Income Support Options
CRS Report RS22022, Disaster Unemployment Assistance
(DUA).
Access to Individual Retirement Accounts and
Employer-Sponsored Defined Contribution
CRS Report R45182, Unemployment and Employment
Pensions
Programs Available to Workers Affected by Disasters.
The Internal Revenue Code generally imposes a 10%
penalty on retirement savings account withdrawals,
CRS Report R44580, Workers’ Compensation: Overview
including those from individual retirement accounts (IRAs)
and Issues.
and employer-sponsored defined contribution plans (such as
401[k]s and the federal government’s Thrift Savings Plan),
CRS Insight IN11229, Stafford Act Assistance for Public
that occur before the account owner reaches age 59½.
Health Incidents.
Under current law, certain circumstances that warrant
withdrawals are exempted from the penalty, including
CRS Report R40368, Unemployment Insurance Provisions
unreimbursed medical expenses in excess of 7.5% of
in the American Recovery and Reinvestment Act of 2009.
adjusted gross income (10% if under age 65).
CRS Report R44835, Paid Family and Medical Leave in
While individuals may withdraw amounts from their IRAs
the United States.
for any reason, individuals with employer-sponsored plans
are generally not permitted to withdraw funds except in the
Laura Haltzel, Coordinator, Section Research Manager
case of hardship. Plans may, but are not required to, offer
Katelin P. Isaacs, Specialist in Income Security
hardship distributions and may choose which situations
William R. Morton, Analyst in Income Security
qualify. Safe harbor regulations automatically deem certain
Elizabeth A. Myers, Analyst in Income Security
expenses as being due to hardship, or immediate and heavy
financial need (26 C.F.R §1.401[k]-1[d][3][B]), including
Scott D. Szymendera, Analyst in Disability Policy
certain medical expenses and expenses and losses incurred
Julie M. Whittaker, Specialist in Income Security
by the employee on account of a federally declared disaster.
IF11447
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COVID-19: Social Insurance and Other Income-Support Options for Those Unable to Work


Disclaimer
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https://crsreports.congress.gov | IF11447 · VERSION 3 · UPDATED

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