There has been a lot of publicity about the “UI extension” part of the tax package that is being discussed. As the Senate completes its edits before voting on the package I wanted to clarify the provisions relating to unemployment.
1. Emergency Unemployment Compensation (EUC) Extension. The bill extends the period during which individuals may qualify for EUC from ending the week before November 30, 2010 to the week ending before January 3, 2012. Individuals qualifying by that week may claim weeks of EUC through the week ending June 9, 2012. THERE IS NO INCREASE IN THE NUMBER OF POTENTIAL WEEKS OF EUC BENEFITS.
2. 100% Federal Reimbursement of Regular Extended Benefits. The bill extends the 100% federal reimbursement of regular EB payments (which are normally only 50% federally reimbursed) through the week ending after January 4, 2012, with authority for states to further extend the 100% reimbursement through June 11, 2012. This means that any regular extended benefits (different from EUC) paid during 2011 would not be charged to your UI tax account and would not directly affect future UI tax rates (EUC benefits are also federally funded and not charged to employer tax accounts).
3. New Regular Extended Benefits Trigger Provisions. The regular EB trigger provisions are amended. The effect of the new EB triggers is to keep more states triggered “on” for EB during 2011 and to avoid their triggering “off” during this period.
4. Non-reduction Rule. In general, regular UI compensation may not be reduced. The non-reduction rule that was in place under the previous extension remains in place. Its continuation through the period of the EUC agreement will restrict states from changing the computation of regular UI benefits if the changes would reduce the average weekly benefit amount through the week of June 9, 2012.
5. Cost. The net cost of the new provisions is estimated through 2020 to be $56.485 billion. Most of the cost is in Fiscal Years 2011 and 2012. The bill calls for the additional spending to be deemed emergency and not to require offsetting reductions in spending or offsetting increases in revenue.
It is possible that there will be changes to this as it is finalized in the Senate, but this is the language that is referenced in the discussions of the outline of the agreement with the White House, so significant modifications are not likely without there being other significant changes to the overall package.