Unemployment Insurance: Explanation of Unemployment Insurance

If you are unexpectedly laid off from your job, you can be financially covered by unemployment insurance until you find a new job. Unemployment insurance only covers you for a limited amount of time.

Qualifying for unemployment insurance varies slightly from state to state, however the basics remain the same.

  • You need to have lost your job due to circumstances beyond your control.
  • You need to have earned income in two of the four quarters of the last calendar year of your employment.
  • You need to have earned a minimum gross salary over your base period of two quarters. On average the minimum salary is about 2,500.
  • You must be legally able to work in the U.S. and carry either a social security number or alien registration number.

While you are collecting unemployment insurance benefits, you must be available for work at all times and actively looking for work. Injuries, disabilities, hospitalization and travel could disqualify you. You may not qualify for unemployment insurance if:

  • You quit your job without good cause or you were fired.
  • You are involved in a labor dispute.
  • You left to get married.
  • You left because of illness or you started attending school (there are waivers for extenuating medical circumstances and actual educational programs available in some states).
  • You are self-employed (there are provisions in certain states).

Some other important information includes:

Unemployment Insurance: Explanation of Unemployment Insurance
  • If you have worked in more than one state in the previous 18 months before you lost your job, you may be able to combine your wages, which may result in a higher unemployment insurance benefit.
  • You can still qualify for unemployment insurance if you find part-time work that pays you less than your excess earnings amount.
  • Federal government employee claims are ruled by the Unemployment Compensation for Federal Employees (UCFE) and must be filed with a Standard Form 8 (SF8).
  • Ex-military personnel must file for unemployment insurance with a DD214 form.
  • Disaster unemployment assistance (DUA) is available if you lose your job due to severe weather and the federal government has declared your area a major disaster. The Federal Emergency Management Agency (FEMA) can assist you in your unemployment insurance claim.

While the U.S. is recovering from one of its worst unemployment rates, finding a new job may prove difficult. Contact your state to learn more about unemployment insurance in your area.

Unemployment Insurance: Who Pays For Unemployment Insurance?

Your employer pays for your unemployment insurance, unless you live in a state that allows employers to have an unemployment payroll deduction. In that case, you and your employer pay for your unemployment benefits.

Your employer remits an unemployment tax to the state, which covers the state’s administration fees as well as unemployment benefit payouts. Your state pools all employers’ unemployment tax remittances in the State Unemployment Insurance (SUI) fund. Your state also distributes the unemployment benefits to you when you are laid off.

The mathematics behind this calculation varies between states and is based on your company’s:

  • Number of employees.
  • Employee turnover rate.
  • Number of unemployment insurance claims made by laid-off employees.

Your state is mandated by the federal government under the Federal Social Security Act to collect unemployment taxes from its businesses. A company can be exempt if:

  • They enter into an agreement with the state to pay unemployment benefits directly to their laid off employees.
  • They are a non-profit organization or a government agency and can make arrangements to pay in the form of a reimbursement after the state pays unemployment benefits to their laid off workers, as opposed to a scheduled tax remittance.

Your employer can contest an employee’s request for unemployment benefits. If your company wins its case against you, your unemployment benefit payments will stop. It is in your employer’s best interest to pay as few claims as possible in order to keep his unemployment tax rate down. Your employer can contest on the grounds that you:

  1. Did not work enough weeks to qualify.
  2. Were laid off for a reason that does not qualify you for benefits.
  3. You quit your job.

There is also a federal unemployment tax that your employer pays under the Federal Unemployment Tax Act (FUTA), which is approximately 0.5 to 0.8 percent of your employer’s payroll. This tax is also pooled with all other remittances and is available to subsidize your state’s SUI fund. If a state is experiencing a high unemployment rate and is running out of money to pay unemployment benefits to its laid off workers, the federal government will top up their SUI fund.

Even if your company goes bankrupt, you can still receive unemployment benefits because your employer has been, theoretically, submitting unemployment tax all along and your benefits come from a state pool of company remittances.

Unemployment Insurance: How Long Will Unemployment Insurance Be Paid?

Unemployment Insurance: Who Pays For Unemployment Insurance?

The theory behind unemployment insurance is that it will sufficiently cover you long enough for you to find new employment in your field. To help you get back to work faster, there are support and job search programs available, as well as education and training courses. There are also programs to help you change careers if your current field of work is experiencing a seriously high and long term unemployment rate.

Depending on your unemployment benefit qualifications, you can receive benefits for up to 26 weeks. If you have been diligently trying to find work and are still unemployed when you reach the end of your 26 week benefit period, you can apply for extended unemployment benefits.

Due to the high unemployment rate across the U.S. in the last few years, the federal government can offer extensions to the length of your unemployment benefits period. Your eligibility will be based on:

  • If you have exhausted your original entitlement.
  • If you are either working part-time or not at all.
  • You are not eligible for a second regular claim.

If you are approved, you can receive up to 20 additional weeks for your first extension, depending on the state in which you live and work. If you require a second extension, you may be eligible if you meet the same eligibility requirements mandatory for the first extension. You can even qualify for a third and fourth extension, and if those are exhausted, you may qualify for even more programs. In total, some states can offer you up to 99 weeks of unemployment insurance benefits.

If you have used up your four extensions, you can apply for programs, such as California’s Federal-State Extended Duration Benefits extension (FED-ED extension). Under the FED-ED extension, you can receive up to 20 more weeks of unemployment insurance benefits. There is also an additional 13 weeks of Trade Readjustment Allowance (TRA) benefits available. These programs have very strict guidelines in their approval process.

The U.S. unemployment rate is improving. However, there is still a large percentage of Americans out of work. There may be a fifth extension available soon for people referred to as 99ers, referencing the number of weeks they have been collecting unemployment insurance. This fifth extension will be available only in states that are still suffering from a high unemployment rate.

The federal government is doing all that it can to get Americans back to work.

Unemployment Insurance Directory

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