State Unemployment Insurance In Partnership With:
First Nonprofit Insurance Group Based in Chicago, Illinois Financial Strength Rated A- AM Best Exclusively insuring the nonprofit sector since 1978. Our SUI programs serve more than 1,400 nonprofits across the country covering in excess of 180,000 employees.
First Nonprofit Companies Endorsers
State Unemployment Insurance From a Nonprofit s Perspective
Fact Organizations with a 501(c)3 tax classification have options regarding their unemployment insurance coverage. Like all employers, 501c3s must provide unemployment insurance coverage but unlike other employers, a 501c3 is not required to cover its unemployment through the State Unemployment Tax Fund.
Financing Options Available for SUI Two ways to satisfy state unemployment insurance obligation Through the State Tax Fund (2010) Pay assigned rate on the first $7,000 per employee Min Rate = 0.36%, Max Rate = 5.40% Paid on a quarterly basis Become a Reimbursing Employer Two Options 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 Participate in risk pool, trust, or insure through 3 rd Party
What Is Reimbursing? Organization is financially responsible for reimbursing the State dollar-for-dollar on former employees unemployment claims. Advantage Lower cost Disadvantages No limit to aggregate annual costs (Self-insured or 3 rd Party Plan w/o cap) Max Individual Claim = $7,150 (2010) Max Individual Claim = $9,900 (2010 w/o Fed subsidized EB) Inability to accurately budget for cost (Self-insured) Exposure to severe fluctuation in costs (Self-insured) Loss of certain protest rights (All Reimbursing Employers) Must track credits due (All Reimbursing Employers)
Pros and Cons of the SUI Tax Fund Advantages Fixed annual cost No risk beyond assigned tax rate Disadvantages The solvency level of fund sets rates Socialized costs Costs can increase even if experience improves Added strain on cash flow as majority of tax liability paid by mid-year
UC Tax Rate Notice How are UI Experience Rates calculated? Standard rating Factors 3 Yr Rolling Aggregate Claims Paid (Benefit Charges) Runs on 7/1-6/30 Year 3 Yr Rolling Aggregate Taxable Wages (First $7K per employee) Runs on 7/1-6/30 Year 3yr Agg Claims Paid / 3 Yr Agg Taxable Wages = Benefit Ratio Variable Rating Factors (Based on UI Fund Balance) Multiplier Benefit Ratio X Multiplier = Variable Adjusted Factor Original 2010 = 1.0813 2010-11 = 0.4171 Final Adjustment Factor Original = 1.18% 2010 = 0.36% 2011 = 0.77% 2012 = 2.27% Multiplier Final Adj. Factor
Forward Thinking: Getting Prepared to Address the Rising Costs of Unemployment Insurance
Emergency Unemployment Compensation (EUC08) State Extended Benefits (EB) Standard UC 26 Weeks EUC 53 Weeks State EB** 20 Weeks Tier 1 20 Weeks Tier 2 14 Weeks Tier 3 13 Weeks Tier 4 6 Weeks Liability 100% Employer Liability 100% Federal Government Liability 100% Federal Government Through 6/2/2010 **EB Covered if claimant is on EB by June 2, 2010
Emergency Unemployment Compensation (EUC08) State Extended Benefits (EB) Extension The period during which individuals may file applications for Federal Emergency Unemployment Compensation (EUC) was extended to June 2, 2010 and the period during which individuals may claim and be paid EUC was extended to November 6, 2010. *If claimant exhausts any of the Tier s prior to June 2, 2010 they will be eligible for the next Tier. Covered by Fed until November 6, 2010
A Quick Look at the Florida UI Trust Fund (Number of Unemployed) $2,500 FL UI Trust Fund Balance (1 st Day of Quarter) $2,000 $1,500 (millions) $1,000 $500 $0 3rd 4th 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Quarter Quarter 2008 2008 2009 2009 2009 2009 Balance as of 4/28/10 = NEG $1,612,500,000
Trust Fund Debt 2012 - If FL does not pay loan back by 12/31/2011, employers will be assessed an interest surcharge in addition to the normal UC Tax costs 2012 - the UI Taxable Wage Base increases from the first $7,000 in wages to first $8,500 in wages. 2012 Multiplier will adjust according to solvency needs of the fund. Prior to the repeal of the original rates issued in 2010, Multiplier was 1.0813. 2010-11 Set at 0.4171
Unemployment Products Meeting the Needs of Nonprofits
Unemployment Products Bonded Service Program Unemployment Savings Program Must currently have Reimbursing Employer status or convert to Reimbursing status to participate!
Bonded Service Program Features Bonded Service Program 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 Maximizes cash flow Billed in equal quarterly installments Claims administration service On-site education and training Benefit charge auditing Comprehensive claims counseling and hearing representation Savings average = 29% without refund (1998-2008)
Unemployment Savings Program Features Unemployment Savings Program 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 losses Interest bearing reserve Average investment return = 5.08% (2002-2008) 2008 = 3.6% return Administrative Costs Covers Stop Loss Insurance, Management Fee, 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 Savings average = 39% (1995-2008)
Unemployment Claims Service Includes: Audit of Benefit Charges Benefit Awards, Claims Duration, & Liability for Accuracy Ensure Credits Are Received Audit Charges to Wages Paid to Detect Fraud Claims Process All Separation Data & Unemployment Claims Review, Prepare Arguments, & Protest Decisions As Needed Attend All Unemployment Hearings Technical Services Review Personnel Policies & Procedures (all hiring & separation) Provide Educational Workshops for Management & Supervisors Customized Claims Activity Reports Individual Claim Status Reports
How to Receive a Quote? 1. Fill out one page application 2. Provide copy of 2010 UI Tax Rate Notice (see slide 20) Only for employers currently in the State UI Tax Fund 3. Provide copies of Quarterly Notice of Benefits Paid forms (see slide 20) covering: 1. Currently in the State UI Tax Fund: 7/1/09-6/30/10 2. Reimbursing: 7/1/07-6/30/10 4. Fax to 727-449-8437
2010 UC Tax Rate Notice / Notice of Benefits Paid
Thank You! Presented by Eric Beck Vice President, Bouchard Insurance & Joseph Poretto Vice President, Sales & Marketing, First Nonprofit Companies If you wish to receive more information Contact us at 727-447-6481