On December 17, 2010, President Obama signed into law the “Tax Relief, Unemployment Insurance Reauthorization, And Jobs Creation Act of 2010.” Most people have heard that as part of a compromise on extending across the board tax cuts, Congress agreed to extend federal unemployment benefits for an additional 13 months. Newspapers have also run stories on people referred to as “99ers” or people who are eligible for up to 99 weeks of unemployment benefits. The stories are confusing and have raised numerous questions as to what this federal extension means and how it affects Wisconsin employers and employees.

1. The Federal Extension Does Not Automatically Extend Benefits For Individual Unemployment Recipients.The federal extension does not simply tack on 13 months of benefits for every unemployment recipient. The extension extended federal programs that were already in place and kept them from disappearing and cutting unemployed off from benefits they were already receiving.Congress authorized the Emergency Unemployment Compensation (EUC) program starting June 30, 2008. EUC has been modified and extended several times since its inception. What EUC does is extend federal benefits to persons who have currently exhausted their regular state benefits. (Typically 26 weeks).Federal emergency benefits are administrated by the state Unemployment Insurance Division and recipients are generally entitled to the same amounts as they were receiving from the state fund.
2. EUC Is A Federally Funded Program.Employers often ask whether extended benefits are drawn from their employer UC accounts and will result in higher state UC taxes. The answer is No. EUC is a fully funded federal program and payments are from the federal government once state eligibility is exhausted. State taxes will not change because of the extended benefit programs.
3. How Many Weeks Of Benefits Are Employees Eligible For?The maximum eligibility for unemployment benefits, combined state and federal, is 99 weeks, hence the term “99ers.” However, the availability of federal emergency benefits varies among states based upon each state’s unemployment rate. In Wisconsin there are no “99ers.” The maximum number of weeks an individual can receive unemployment benefits is 86 weeks. This would include 26 weeks of state benefits and current eligibility for 60 weeks of federal emergency benefits.Even with the extension of emergency benefits, persons who are not currently unemployed, but become unemployed in 2011, would not likely be able to receive 86 weeks of benefits without further action by Congress. Persons who become unemployed in 2011 would have to first use up all state benefits and then move to the federal tiers (Tier 1 – 20 weeks; Tier 2 – 14 weeks; Tier 3 – 13 weeks). All state benefits would have to be exhausted by December 24, 2011 to be eligible for Tier 1 federal extension, and all Tier 1 benefits would have to be exhausted by December 31, 2011 to be eligible for Tier 2, etc. Thus persons not already unemployed would be unlikely to exhaust initial benefits in time before the current extension expires.What the extension really means for newly unemployed is that federal emergency benefits will be available until the end of 2011 unless further extensions are passed.

CONCLUSION

There has been a lot of confusion over what the term “extended benefits” means and its impact on employees and employers. The bottom line is that the extension simply keeps in place what has already been in place for the past several years. There are no overnight changes nor is there any direct tax consequence to employers. Current emergency programs are continued through the end of 2011.

For the further information, see http://dwd.wisconsin.gov/uiben/extended_benefits.htm.

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