COVID-19 Financial Support: Who’s Covered and Who’s Not?

I. Introduction

At the onset of the coronavirus (COVID-19) pandemic, federal, state, and local governments moved quickly to establish and increase financial supports for individuals. The federal government instituted economic impact payments for consumers, expanded unemployment insurance, and appropriated additional funding for nutritional programs through the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Many of these supports are administered through state and local governments and may complement additional actions that states and localities are taking to support individual financial security. While these economic supports are widespread, they are not universal; intentional and unintentional policy design features exclude some groups and individuals from financial support. This Regional Matters asks: Who’s left out from existing governmental support programs?

II. Federal Benefits

Economic Impact Payments
Economic impact payments are the most universal consumer support in the CARES Act. These payments of $1,200 per adult and $500 per qualifying child for individual incomes below $75,000 are available to all Americans; payment amounts decrease on a sliding scale for individuals who earn up to $99,000. Unlike some past stimulus payments, these economic impact payments do not have a minimum income threshold. And, they are generally not subject to garnishment (with a few exceptions, including federal garnishment for late child support and court-ordered garnishment).

Unemployment Insurance
Unemployment Insurance (UI), the joint federal and state government program that offers cash benefits to individuals who lose their job through no fault of their own, was significantly expanded through the CARES Act. Some program guidelines are set at the federal level, while states decide stipulations such as maximum benefit amounts as well as eligibility for – and duration of – benefits. The CARES Act implemented temporary changes to the UI program across the board, including a $600 increase per paycheck until July 31, 2020, for recipients and an expansion of who is eligible to receive the cash payments. Through December 31, 2020, UI is available to individuals who:

• Are laid off due to the coronavirus.
• Are left with reduced work hours due to the coronavirus.
• Are self-employed and lost pay due to the coronavirus.
• Are quarantined and unable to work due to the coronavirus.
• Are unable to work due to a risk of exposure to the coronavirus.
• Are unable to work because they are caring for an ill family member due to coronavirus.

The expansion also extends UI benefits to workers who were previously ineligible for the program including independent contractors, gig workers, and sole proprietors. The CARES Act also extends insurance payments by 13 weeks to all recipients, although total weeks payable varies by state.

Nutritional Programs
The stimulus bills, FFCRA and CARES, provide $500 million in emergency provisions for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and $15.5 billion for the Supplemental Nutritional Assistance Program (SNAP) due to the novel coronavirus, respectively. This funding is meant to accommodate increased participation in these programs over the coming months. The money for both will remain available through September 2021.

All 50 states are now administering emergency allotments to SNAP recipients, which allows households to receive up to the maximum allotted benefit for their household size. These changes to SNAP help to meet the temporary food needs for some recipients, but not all. Households already receiving maximum SNAP benefits – usually the lowest income recipients – do not receive expanded assistance from emergency allotments.

III. State Benefits

As discussed in a recent Regional Matters post, because states determine unemployment insurance benefit structures, the program varies across the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia. Considering uniform expansion to the program, recipients in states that previously had the lowest weekly benefit amounts will see the largest percentage increases. For example, in South Carolina, after a $600 increase, weekly average benefits are 229 percent of the average weekly benefit paid in 2019 ($262.56). In the District of Columbia, payments will be 167 percent of the 2019 average ($358.79). Further, due to changes from the CARES Act, Fifth District residents claiming unemployment will be able to collect the aid between six and nine months, but the $600 increase per paycheck only applies through July 31.

State Program Unemployment Metrics, with CARES Act Expansion

Department of Labor, Employment and Training Administration Minimum Disaster Unemployment Weekly Benefit Amount (DUA) and 2020 Significant Provisions of State Unemployment Insurance Laws
* As of January 2020
** Based on 2019 average weekly benefit
*** Depends on the unemployment rate

Concerning nutritional programs, states elect what extensions to offer their constituents. In the District of Columbia, Maryland, North Carolina, South Carolina, and Virginia, efforts are underway to reduce in-person administration of SNAP and WIC including waiving in-person interviews for new applicants. All Fifth District states except for South Carolina are automatically recertifying current SNAP recipients. North Carolina is currently the only Fifth District state offering the Pandemic Electronic Benefits Transfers (P-EBT) program to households with children affected by statewide school closures. According to the U.S. Department of Agriculture’s Food and Nutrition Service, the P-EBT program is a SNAP benefit that will allot cash payments to children who are eligible for free or reducedprice meals at school using debit card technology. North Carolina is predicting spending roughly $240 million on this effort, where 63 percent of those funds will be distributed to non-SNAP households.

IV. Who's Left Out?

Federal and state policy supports for consumers are designed to be very comprehensive, but some groups remain excluded, or face higher barriers to access. These groups include extremely low-income individuals, those who are detached from the banking system and/or the Internal Revenue Service (IRS), taxpayers without a U.S. Social Security Number (SSN), some college students, and other dependent adults.

The IRS has established a platform for non-tax filers to submit their information to receive a direct payment. But, it may still be difficult for extremely low-income individuals to notify the federal government of their eligibility and physically receive a direct payment. In particular, the 13.4 million Americans without computer access and those without a permanent address – including the half a million Americans who are homeless – may need to rely on family members, friends, nonprofit organizations, or government agencies to help them submit their information and receive a payment. The 6.5 percent of unbanked households in the United States – many of whom may overlap with the group of extremely low-income individuals – face additional access challenges. These approximately 14.1 million individuals do not have an existing bank account for direct deposit or check processing and may need to rely on higher-cost alternative financial services, like check cashing services, to cash a paper check. Within the Fifth District, this may be of highest concern in the District of Columbia and West Virginia, where unbanked rates are 8 percent and 7.8 percent, respectively. (See chart below.)

In mid-April, the Consumer Financial Protection Bureau announced that economic impact payments could legally be distributed through accounts with specific financial institutions, which would, in theory, allow the federal government to disperse funds through prepaid bank accounts or prepaid debit cards. However, it remains unclear if the federal government will pursue a means of distribution beyond direct deposits and paper checks.

Some married couples who file taxes jointly could miss out on the individual stimulus. A requirement of receiving a government-issued payment is a valid SSN, which some non-citizens do not have. In the case of the coronavirus relief, if one member of a married couple that files taxes jointly does not have an SSN, then the couple – including any children – is not eligible to receive aid. This is true even if the non-citizen without an SSN uses an Individual Taxpayer Identification Number (ITIN) to pay taxes in the United States.

As mentioned earlier, households will receive an extra $500 per child as a part of the CARES Act economic impact payments. However, this benefit is extended only to children under 17, which excludes any adult children who may still be claimed as dependents on taxes, especially full-time college students. College students may still receive some relief; the U.S. Department of Education recently announced the distribution of $6.28 billion to colleges and universities for emergency financial aid grants to college students. And, this money is just a portion of the $31 billion authorized for emergency education funding. But grant distribution is restricted to students who are eligible to receive federal financial aid (typically those who have filled out a Federal Application for Federal Student Aid). Additional details about grant distribution to college students remain unclear, and other adult dependents, including the elderly and disabled, remain ineligible to receive their own stimulus check. In all cases, caring for a dependent, or simply having another individual living in a household, creates additional financial burden.

V. Conclusion

Fiscal transfers may be less important for long-term consumer financial well-being than well-designed mortgage and student loan forbearance programs, according to forecasts from the Richmond Fed. Still, these payments can provide short-term relief to financially vulnerable households. Economic impact payments, unemployment insurance, and nutritional programs provide broad support, but may exclude some groups. Policy amendments or additions to more widely provide benefit distribution via prepaid cards or direct deposits and make payments available to adult dependents and taxpayers with an ITIN, may increase financial support for economically disadvantaged households.

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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.