What is Unemployment Insurance?

What is Unemployment Insurance?

What is Unemployment Insurance?


Unemployment sits among the top priorities of any country. In fact, the United States of America recorded a total number of 400,000 citizens who filed for unemployment benefits in 2012.  Unemployment insurance can help.

Unemployment has become a large issue and focus across all countries.  This is why there is a need for both state and federal governments of every country to issue unemployment benefits to deserving citizens.

If you plan on filing for unemployment insurance benefits, then this article will be helpful.  It will serve as a guide, and teach you all you need to know about unemployment insurance and benefits.

What is Unemployment Insurance?What is Unemployment Insurance?

Unemployment insurance, also called unemployment benefits, is an insurance scheme set up by the government of a state to help workers who lost their jobs through no fault of their own.

Imagine your company hits a crisis and has to let some workers go.  Unfortunately, you are one of those workers who was laid off. Where do you get money for your bills and survival?

This is where unemployment insurance comes in. It is designed to provide you with just enough money to keep your finances together while you search for another job.

Where Does the Money Come From?

Employers are made to pay a specified amount of money as unemployment tax into the state’s unemployment insurance account. The rate you pay depends on the amount of benefits your former employee receives.

When an employer fires someone, his tax rate increases.  But that should not stop you from firing someone who is not performing in your company.

If you have good reasons to lay off a worker, be sure to follow proper procedures. If you do it properly, you can reduce your tax rate.

You are also free to contest the unemployment benefit claim when you feel the worker is ineligible.

Who is Eligible to File for Unemployment Insurance?

The unemployment insurance is not available to every worker who is fired. You must meet certain requirements to qualify for an unemployment insurance claim.

Some of the necessary requirements include:
  • The worker must have a minimum amount of work experience.  Usually within the past six months to one-in-a half years.
  • You must have earned a specific amount of wages from your past job. The amount of your former salary also affects the amount of benefits you claim.
  • The worker must be willing, ready, and able to work. If you are incapacitated by health issues, you will not be eligible for the unemployment benefits.
  • You must be truly unemployed. That is, you must have no other source of income. If you have a part-time job, then you are ineligible to make benefits claim.
  • The worker must be actively job hunting. Most workers get comfortable with the benefits and stop job hunting. Your benefits will be cut off if you have filed an unemployment insurance claim already. You must file for job applications, show up for the scheduled interviews, and accept any suitable position you are offered.
  • Lastly, the worker must make a claim for unemployment benefits. You will receive no benefits if you meet the aforementioned requirements and fail to file for unemployment insurance.

What Can Disqualify an Eligible Worker?

In some cases, you might meet all of the necessary requirements and not qualify still. Why? Let’s see some of the reasons that could disqualify an eligible worker.

  • If the worker left his/her former job voluntarily. You will not be qualified for the unemployment benefits if you quit your job without a good cause. A worker who quits to go set up his or her business is not qualified. Even if he/she meets the necessary requirements.
  • When a worker turns down a befitting job offer while unemployed. It is not enough to be actively job hunting. If you turn down a suitable job offer, then you fail to qualify for benefits. “Suitable job offer” in this context means a job befitting the worker’s prior level, salary, training, and experience.
  • An omission of important information is also a reason to disqualify an eligible worker.
  • You could also be disqualified if you lied on the benefit claim. So, you must fill in the necessary information correctly.
  • A worker who was fired for violating the company’s rules and regulation does not qualify for the unemployment insurance. The insurance is made available to those who lost their jobs through no fault of their own, not for those who were fired for misconduct.
  • You fail to qualify for unemployment benefits if you are receiving a private pension, social security, severance pay or workers’ compensation.
  • A worker who is unemployed because of a strike or work stoppage caused by a labor dispute fails to qualify for the unemployment benefits also.

Ways to File for Unemployment Benefits

There are different means of filing for benefits depending on your state. Some states allow for online filing, some paper form, while others allow both ways of filling. Be sure to check with your state’s Unemployment Insurance Agency to know the available means of filing.

An eligible worker can file through;

  • Phone call application
  • Paper form application
  • Online application
  • Videophone services, designed especially for individuals who use American Sign Language (ASL).
  • TTY services, made available to the deaf and those who have a hard hearing.

Steps of Filing for Unemployment Insurance

You would agree with me that there is too much paperwork involved in filing for unemployment benefits. This makes the process tiring and somewhat frustrating to first timers especially.

If you are one, then relax! Here are the steps you will need to follow as you file for unemployment insurance.

Check your Eligibility

It is important you file immediately you lose your job but the first and most important thing to do before filing is to check if you are eligible or not. It would be a wasted effort filing when you are ineligible. If you were fired from your last job because you violated the company’s rules then you are not eligible for the benefit. But if you were a victim of a layoff, you should be eligible. It is best you get more information from your state’s Department of Labor website as the requirements vary with states.

Provide the Necessary Information

Some vital information is needed while filling for unemployment benefits. Be sure to provide accurate information. Some of the necessary information is; your name, home address, state security number (SSN), valid email, mailing address, direct deposit bank information (bank name, routing number, address, and account number), reason for leaving your former job, employer’s information (name, phone number, and address), duration you worked with the employer, severance or pension package (if any), and ability to work.

Appealing the Decision

Your unemployment benefits claim can be denied sometimes even when you are eligible to file. Fret not, you can appeal the decision. First, go over the stated instructions for filing an appeal to be sure you followed due processes and submitted by the deadline. Then, file again (this time in writing) and make sure you include the contacts of your former employer who can support your claim because he or she will be contacted by the unemployment office before ruling on your appeal.

What to Expect after Filing a Claim for Unemployment Benefits

After several business days of filing a claim for benefits, you should receive;

  • Claim Confirmation Letter, which confirms that your claim was received. This confirmation letter usually contains important information such as your PIN (for weekly filing), date to file your first weekly claim, and other necessary requirements to remain eligible for the benefits.
  • Notice of Financial Determination, which shows if you are financially eligible for benefits and the amount of weekly benefits you will receive.

How Much is the Unemployment Benefits?

Multiple factors affect the amount you receive as benefits. The most important of these factors is your salary the previous year.

Workers with a high salary will receive more than others. It is usually within the range of 50 – 70 percent of your former salary.

The unemployment benefits are paid weekly and usually for 26 weeks of the 52 weeks of the year. But it also differs according to states. So, be sure to familiarize yourself with your state’s unemployment insurance terms.

How Long Does the Unemployment Benefits Last?

It is expected of you to actively search for a job while you are receiving unemployment benefits. In fact, it is a criterion for keeping the benefits current.

You are to report, on weekly basis, the number of jobs you applied for and the interviews you had. Some states’ Unemployment Agencies now ask for proof (such as email, interview schedules, and faxes) to back up your job hunt claim.

Am I Required to Pay taxes on the Unemployment Insurance?

Although most states may not expect your tax return, unemployment benefits is considered a source of income as such, it is taxable by the federal government.

Is it Compulsory to Report When I Get a Job?

Yes, it is. It is a federal crime to receive unemployment benefits while working. You should report to your state’s Unemployment Agency as soon as possible.  You can contact an attorney to better understand your rights.

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