How Does Unemployment Insurance Work?

Common Unemployment Benefits Questions Answered

An employee carries a box of belongings out of an office.

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If you find yourself out of work, you may feel overwhelmed trying to navigate the ins and outs of unemployment insurance.

To help guide you through this transition, here are the answers to some of the most common questions about unemployment insurance. Learn what you can do to file for unemployment insurance when you lose your job.

Key Takeaways

  • Unemployment benefits can provide you with a portion of your old wages after losing your job.
  • Unemployment is only available to people who lose work through no fault of their own.
  • Each state runs its own unemployment program, although the federal government issues some guidelines.
  • Unemployment benefits may temporarily change due to changes in policies for federal benefits or a state’s unemployment rate.

How Do Unemployment Benefits Work?

Unemployment benefits are payments for workers who become unemployed through no fault of their own. If you meet the eligibility requirements, unemployment benefits temporarily replace a portion of the wages you lost to help you pay for your expenses while you look for a new job.

The United States Department of Labor oversees the system for the unemployment insurance program, and the federal government pays the administrative costs. The federal government also issues guidelines to help states run their program.


Within federal guidelines, each state can set its own eligibility requirements and may have a different application process. Check with your state’s unemployment insurance program to find out your requirements and benefits.

Unemployment benefits first began in 1935, and are funded by taxes employers pay. Unlike some other types of benefits, unemployment insurance isn’t based on financial need.

Who Is Eligible for Unemployment Insurance?

Unemployment eligibility requirements vary from state to state. They can also change due to unexpected economic circumstances, as seen during the height of the COVID-19 pandemic, or during other periods of high unemployment. This means you’ll want to check out your state’s current requirements when you’re ready to file your claim.

In general, you’re likely to be eligible for unemployment if you:

  • Are unemployed through no fault of your own.
  • Are willing and able to work, and willing to accept any suitable offer of employment.
  • Are actively searching for work (although there may be exemptions to this requirement).
  • Earned enough and worked enough during the base period to meet your state’s requirements before becoming unemployed.

How To Claim Unemployment Benefits

Before you receive any unemployment benefits, you must file an unemployment claim. Depending on your state, you may be able to do this online, over the phone, or in person.

When you file your claim, consider these important guidelines:

  • You likely need to file your application in the state where you worked, even if you don’t live in that state.
  • You should apply for unemployment as soon as possible after losing your job. Many states ask you to file your claim immediately.
  • When filling out your unemployment application, provide as much information as possible, being honest and thorough as you answer each question.
  • It can take two to three weeks to receive your first benefit payment.

Can You Apply for Unemployment Benefits if You’re Self-Employed?

If you’re self-employed, you aren’t usually eligible for unemployment benefits. However, the COVID-19 crisis prompted government officials to extend unemployment to self-employed people, gig workers, freelancers, and independent contractors, so check with your state’s unemployment office to check your eligibility.

Most states require self-employed people to file a standard unemployment claim to begin the process. You may be denied unemployment since you aren’t an insured worker. However, if special benefits are in place, you may be able to apply for those unemployment programs once you are denied.

Where Can You Apply for Unemployment Benefits?

You need to apply for unemployment in the state where you worked. Many states allow you to apply online, over the phone, or in person.

The U.S. Department of Labor’s CareerOneStop website has a state directory where you can find your unemployment benefits.

Duration of Unemployment Benefits

In most states, basic unemployment benefits last for 26 weeks, but this can vary between states, with some states providing fewer weeks and others providing more. Additionally, during times of unusually high unemployment, some states may increase the benefit length.

What Can Disqualify You From Unemployment Benefits?

Not everyone is eligible for unemployment benefits. Requirements are different in each state, but typically, you will be disqualified if you:

  • Quit your job without good cause, as determined by your state.
  • Only worked at your job for a short time before becoming unemployed.
  • Didn’t make enough money before you lost your job.
  • Were fired for work-related misconduct.
  • Aren’t able or available to work.
  • Are not looking for work, or don’t report your job search activity.
  • Refuse suitable job offers.
  • Knowingly provide false information on your claim.

Job search requirements may vary from state to state. Make sure you know what is required in your state and report information about your work search.

What Can You Do if Your Claim Is Denied?

If your unemployment claim is denied, you have the right to file an appeal with your state. However, most states have a timeline for the denial process. So if you disagree with the decision, start the appeal process right away.

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  1. U.S. Department of Labor. "CareerOneStop."

  2. Center on Budget and Policy Priorities. "Introduction to Unemployment Insurance."

  3. Department of Labor. "How Do I File for Unemployment Insurance?"

  4. U.S. Chamber of Commerce. "Can 1099 Employees File for Unemployment Benefits?"

  5. Center on Budget and Policy Priorities. "Policy Basics: Unemployment Insurance."

  6. United States Department of Labor. "Unemployment Insurance."

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