Monday, November 21, 2016

Student offers introduction to unemployment insurance

Unemployment Insurance, an Introduction

Let me introduce the policy called Unemployment Insurance or UI. This policy deals with insurance for people who have a lack of work or who have lost their job and need that extra help when it comes to emergencies. These can include fire, health, and other accidents. This policy is set for a time of 26 months so a person can get try and get back onto their feet and find another job. A person cannot apply for this program if they quit work or let go from the job for misconduct. There are also rules that deal with the poor.  For the poor, if someone hasn’t been trying to work or hasn’t worked for some time, those people cannot apply for the UI. There are other people that cannot get this insurance that aren’t poor. Those people are farmers, and people that are self employed. 

The money that is put into the UI comes from employers, who pay payroll taxes, which may be hidden from their employees.  While employees see their portion of payroll taxes that go to Social Security and Medicaid, employees make no contributions to Unemployment Insurance, so they may not realize that their employer (In Illinois) pays between 0.55% and 7.75% on the first $12,960 paid to the employees into the state’s Unemployment Insurance funds. The actual percentage is determined by a complicated formula that changes according to how much money Illinois recently had in the funds to pay benefits and the number of layoffs in particular industries, so that companies that seem at higher risk for laying off workers pay more than companies that seem unlikely to lay off any workers. The Federal Government charges employers 6% on the first $7,000 paid to employees for the Federal Unemployment Insurance tax, but the Federal Government gives employers credit for paying the state unemployment taxes, so in actual practice, in almost all the states employers pay just 0.6% on the first $7,000 paid to each employee, or $42 per employee. 

   So this money that is going out as unemployment insurance to support the recently laid-off is not from the general pool of taxpayers. Rather, this money comes from the payroll taxes paid by employers, and is essentially covered by money paid by the employers in the previous jobs the now-unemployed person had held.  In order for that employer to pay money into the unemployment insurance fund, they must have workers that are in occupations covered by unemployment insurance.  For example, if you incorporate your farm and have that farm pay you for your work as a farmer, you are not covered by unemployment insurance, so your farm does not need to pay your unemployment insurance to the state or the federal government, but you will not be insured by unemployment insurance, and if your farm ceases to employ you (if your farm goes bankrupt or you sell out to some other farm and cease to work on what was your farm), you will not be eligible to collect unemployment insurance. In Illinois if someone is looking to get into this program they would just go to the Illinois Department of Employment Security (IDES), or to the IDES website. When a person gets the money the state calls this unemployment insurance “benefits”. These benefits are distributed biweekly. The amount is based on the need of the person that is reserving it, and need is determined by their former income. When someone is on the plan they may lose the benefits if they do not follow rules or what the IDES calls the instructions in the book. 

If someone loses their benefits, they do have the right to have representation to help when trying to get it back or fighting to understand why it was taken away in the first place, but their representation must be authorized first. When a person does need to file for the benefits they must do so the first week after they lost their job, or as fast as they can. If they wait or just don’t do it, then when they do try they will not get their benefits or else they may miss out on most of what they could have received. On the IDES website they show who can get the insurance, and if someone doesn’t fit into those groups, that doesn’t mean they can’t; it just means they don’t show it. On the other hand, there are some who cannot get it no matter what. The farmers cannot because they are self employed. The IDES website also explains how someone maybe eligible for unemployment benefits. Some examples would be: you were registered to seek work with IDES, and you aren’t working through no fault of your own. The IDES website also gives a lot of examples why someone may not get unemployment benefits. A couple reasons for denial benefits are: you are not working because you quit for no good reason, or you were fired. Someone may also not get unemployment benefits if they don’t apply to get it early enough, or their health, safety and morals are at risk. There are many other things the website gives like how to apply what you can get when you apply and what you need in order to apply. 


Unemployment Insurance Benefits Handbook, Illinois department of Employment of Security. 

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