On March 2, 2010, the U.S. Senate passed H.R. 4691, the Temporary Extension Act of 2010 by a vote of 78-19.  This Senate action follows House passage of H.R. 4691 on February 25, 2010.  The President immediately signed this bill into law on March 2, 2010.

The Temporary Extension Act:

1. Extends the COBRA subsidy program that was enacted under the American Recovery and Reinvestment Act and
2. Extends unemployment benefits through April 5, 2010.

COBRA

The law’s COBRA provisions:

• Extend the eligibility period for the 15-month 65 percent premium subsidy to those involuntarily terminated from March 1 through March 31, 2010.

• Allow employees to receive the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the bill.

Unemployment Insurance

The law’s unemployment insurance benefit provisions:

• Extend the period during which individuals may file applications for Federal Emergency Unemployment Compensation (EUC) from the current end date of February 28, 2010 to April 5, 2010 and the period during which individuals may claim and be paid EUC is extended from July 31, 2010 to September 4, 2010.
• Extend the period during which individuals may qualify for the Federal Additional Compensation (FAC), the extra $25 weekly benefit amount on state and federal unemployment compensation, from the current end date of February 28, 2010 to April 5, 2010 with weekly payment provided during the phase out period for weeks ending October 5, 2010 instead of August 31, 2010.
• Extend the period during which 100% federal reimbursement for weeks of regular federal extended benefit payments to April 5, 2010, with the state option to continue the extended period from July 31, 2010 to September 4, 2010.

Additional Extension

These “short-term” extensions of the COBRA subsidy and unemployment benefits are intended to give Congress more time to consider legislation to extend these programs through 2010.  Under H.R. 4213, a bill the Senate is currently debating, both the COBRA subsidy program and unemployment benefits would be extended through December 31, 2010.

by National Association of State Workforce Agencies

NASWA has released a survey of the state unemployment trust fund solvency and tax rates. The survey’s findings underscores the significant impact that the current economic recession is having on Unemployment Insurance (UI) costs for all employers.

A total of 24 states will increase their taxable wage base in 2010. Of these 24 states, seven states (AR, FL, IN, NH, TN, VT and WV) have enacted legislation to increase the state’s “taxable wage base,” the level of wages subject to a payroll tax on employers. The remaining 17 state programs (AK, HI, ID, IA, MN, MT, NV, NJ, NM, NC, ND, OK, OR, UT, VI, WA and WY) index their taxable wage bases to the state’s average wages and will automatically increase their taxable wage bases for 2010.

Of the 51 state programs surveyed, 28 states (AK, AL, AZ, CO, GA, HI, IA, ID, IL, KS, MA, MD, ME, MN, MT, ND, NE, NH, NJ, NY, OH, OR, PA, PR, VA, VT, WI and WY) indicated the tax schedule in their state will see an increase in 2010 compared to 2009. The majority of these increases will be automatic; adjustments often triggered by low levels of reserve funds in the state accounts used to finance unemployment benefits. While it is normal for states to recalculate tax rates each year, the magnitude of these rate increases for most states is unusual.

In addition, ten states (CA, CT, DE, KY, MI, MO, NC, RI, SC and TN) indicated their tax rate schedules were already at the highest tier, which would prevent them from automatically increasing in 2010. Consequently, the state legislatures would need to enact changes in state laws – either increasing the tax rates by changing tax rate schedules or increasing the state taxable wage bases.

Six of the 51 state programs surveyed (AR, CA, CT, FL, HI and MA) indicated they will automatically increase their tax rates due to a solvency tax already in state law. The majority of these solvency taxes also activate when states’ trust fund balances fall below specified levels.

Of the 51 state programs surveyed, 35 states estimated the level of UI tax revenue collected in 2010 would surpass the level collected in 2009; with a median projected increase of 27.5%. The range of these projected increases was 2.5% to 600%.

More information can be found at www.workforceatm.org