Georgia State Unemployment Insurance

Transcription

1 Georgia State Unemployment Insurance

2 First Nonprofit Group An AmTrust Financial Company Based in Chicago, Illinois Our State Unemployment Insurance (SUI) programs serve more than 1,700 nonprofits across the country, covering in excess of 320,000 employees. 2

3 State Unemployment Insurance From a Nonprofit s Perspective

4 The Law States: The Method the States are Required to use in Coverage.06 Nonprofit organizations.--irc Sec (a) (6) (B) provides, as a condition for approval of state laws (see.05, above), that the states must permit the nonprofit organizations required to be covered under IRC Sec to contribute state unemployment taxes under a special method. Under IRC Sec. 3309(a)(2) the states are required to provide nonprofit organizations, or groups of such organizations with the option of reimbursing the state for unemployment compensation payments attributable to service with the organization (s) in lieu of paying contributions under the normal tax provisions of the state law. This includes nonprofit elementary and secondary schools from In effect, the nonprofit organizations are allowed to adopt a form of self-insurance. Under the reimbursement method of financing, a non-profit organization whose workers experience no compensated unemployment in a year will have no unemployment insurance costs for that year. A nonprofit organization electing to switch to the reimbursement method of paying UI contributions is, under specified conditions, allowed to apply any accumulated balance in its state UI account to benefit costs it incurs after the switch, under the 1983 Amendments (see) 23,305J). IRC Sec (a) (2) authorizes a state to enact safeguards to insure that those nonprofit organizations which use the "reimbursement" method of coverage will make their payments to the state. For example a state may require that a bond be furnished by a 4

5 Fact Organizations with a 501(c)3 tax classification and Governmental Employers have options regarding their state unemployment coverage. Like all employers, they must provide unemployment insurance coverage, but unlike other employers, they are not required to cover their unemployment through the State Unemployment Insurance (SUI) tax fund. Wages Earned determines the value of claimant s weekly UI benefits and duration of weeks available Job duties, title, tenure, etc. does not come into play No classification codes 5

6 Financing Options Available for SUI Two ways to satisfy SUI obligation Through the state tax fund (2015) Pay assigned rate on the first $9,500 per employee Minimum Rate = 0.04%, Maximum Rate 8.10% Cost variance of $ $ Paid on quarterly basis Become a Reimbursing employer Two options Option One: Self-insure one s unemployment benefits State issues a bill to the employer at the end of each quarter for claims paid to former employees Employer must Secure Surety Bond, Bond amount Determined by State Option Two: Risk pool, trust, or insure through 3 rd Party 6

7 Forward Thinking: Getting Prepared to Address the Rising Costs of Unemployment Insurance 7

8 How the SUI System Works Who are the Insurers Main: SUI trust fund Financed by employer paid premium via the SUI tax Secondary: Private sector/self-insured employers Only 501(c)3 & governmental employers eligible Who are the Reinsurers? Federal government = State tax funds Done via the Title XII Loan Program which is backed by the Federal Unemployment Tax Account Current loan balance: $7.14 Billion Financed by FUTA (paid by all for-profit employers) Private sector = Secondary 8 8

9 State UI Trust Funds Map depicts the status of state trust fund solvency as of April 30, RED - On Title XII Loan as of the end of April 30, 2015 BROWN Issued bonds to repay loan to Federal Gov t YELLOW - Positive balance but <6 months of benefits in the state trust fund GREEN - Positive balance and >6 months of benefits in the state trust fund 9

10 Georgia Legislation: HB-714 BACKGROUND: Reasonable Assurance, commonly referred to in the industry as RA, is a regulation in each state s unemployment law that provides for denial of benefits between successive academic terms (e.g. summer break) if there is a reasonable expectation of employment in a similar capacity in the subsequent term. The most common application of RA is with teachers. Georgia Sec defines it as a written, verbal, or implied agreement between an employer and its employee that such employee will be returned to employment following the period of unemployment. Please note that RA applies to individuals who are temporarily laid off between academic terms and have a likelihood of returning to a similar position. It does not apply to individuals who permanently separate through lack of work, voluntary resignation, or discharge. This will be a change for many of you who operate as a third-party within educational institutions in Georgia a.k.a. educational service contractors, under the amended law. WHAT YOU NEED TO KNOW: Georgia has essentially redefined educational employers to include educational institutions and educational service contractors for purposes of applying denial of unemployment benefits between successive academic terms under its RA regulations. While the amended law does not specifically contain terms like bus drivers or food service workers, in talking with agency administrators, we have been advised that the amended law treats all workers associated with educational institution work in the same manner, i.e. unemployment benefits will not be paid if there is a contract or reasonable assurance of returning to work. Initial, additional, or reopened claims with an effective date on or after 1/1/15 will be adjudicated under the new law. ACTION STEPS: When contacted by your Unemployment Insurance Consultant, be sure to advise him/her if the worker has RA to return following the break and provide a copy of the RA letter. While written notification is not a requirement, its usage is strongly encouraged and can strengthen the unemployment case. It is important to consider that if the subsequent employment following the break is subject to class enrollment levels or other budget considerations, RA does not apply and cannot be pursued.

11 Georgia Legislation: HB-117 Georgia HB 117 was signed by Georgia Governor Nathan Deal on May 6, The bill: (1) modifies the definition of most recent employer ; (2) amends circumstances when charging regular benefits paid against the experience rating account:, (3) amends application for adjustment or refund process; (4) amends grounds for UI disqualification; and (5) amends provision related to requirements, procedures and conditions for verification of lawful presence within the U.S. in conjunction with electronic filing of an application for UI benefits ***Effective July 1, 2015

12 Unemployment Products Meeting the Needs of Nonprofits

13 Bonded Service Program Features Fully insured program First and last dollar coverage Premium set at % of gross wages Fixed annual cost Precise allocation to fund source Budgetary certainty Potential Experience Credit/Refund State mandated Surety Bond Maximizes cash flow Billed in equal quarterly installments Claims administration service On-site education and training Benefit charge auditing Comprehensive claims counseling Hearing representation Average Client Savings* 2014: 29% : 27% *Does not include Experience Credit/Refund 13

14 Unemployment Savings Program Features Proprietary reserve account Only responsible for organization s own claims (no pooled/shared risk) Fixed annual deposit (the insured owns the balance) Stop loss insurance Protects organization from unforeseen layoffs or excess loss Interest bearing reserve Average investment return = 3.97% ( ) 2014 = 2.30% return Administrative costs Covers stop loss insurance, management fee, commission and claims administration Maximizes cash flow Billed in equal quarterly installments Claims administration services Handles all correspondence with state on member s behalf Benefit charge auditing Claims counseling and hearing representation Average Savings* Per Client 2014: 35% : 38% *Does not include reserve account 14

15 Unemployment Claims Service Includes: Audit of Benefit Charges Benefit awards, claims duration, and liability for accuracy Ensure credits are received Audit charges to wages paid to detect fraud Claims Process all separation data and unemployment claims Review, prepare arguments, and protest decisions as needed Attend all unemployment hearings Technical services Review personnel policies and procedures (all hiring and separation) Provide educational workshops for management and supervisors Customized claims activity reports Online access Individual claim status reports 15

16 Info for Quote 16

17 How to Receive a Quote? 1. Fill out two page application 2. Provide copy of 2015, 2014, and 2013 UI Tax Rate Notice, (Form DL-626) 3. Provide copies of Quarterly Benefit Charge Notice (Form DL-620) covering: 1. Currently in the State UI Tax Fund: 7/1/13-12/31/14 4. Four most recent wage reports (summary page only) 17

18 State Requirements to Convert from the State Tax Fund to Reimbursing 501(c)3 IRS certificate Letter of intent Surety Bond (provided at no addt l cost for BSP & USP clients) State determines value Timing All paperwork must be submitted to the state by December 1 st Conversion effective for calendar year

19 Thank You! Marshall Whittey Regional Sales Director First Nonprofit Group 1 South Wacker Drive, Suite 2380 Chicago, IL Direct: Cell: [email protected] Ryan C. Tiernan Vice President Doherty, Duggan, Hart, & Tiernan 2301 Dawson Road Albany, GA Phone : Fax: [email protected] 19