Pub Econ_lecture_14_SI Programs in CO

8/3/2019 Pub Econ_lecture_14_SI Programs in CO

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Public Finance

Dr. Katie Sauer

Social Insurance Programs


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Table 14-2


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Unemployment Insurance in Colorado

The Unemployment Insurance Program provides

temporary

partial

wage replacement to workers who have becomeunemployed through no fault of their own.

- funded by employer paid taxes

- provides benefits to those who meet the

eligibility requirements of the Colorado

Employment Security Act

colorado.gov


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Program goal:

- aid in maintaining the economic stability within

a community by safeguarding the income and

purchasing power of the unemployed worker

Administered by:

Division of Employment and Training

in the Department of Labor and Employment


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Base Period Wages (from date you file)

1. Standard Base Period- earned at least $2,500

- during the time period beginning about 15

months ago and ending about 3 months ago

2. Alternate Base Period

- earned at least $2,500

- during the time period beginning about 12

months ago

The earnings must be from employers who paid us

premiums for the unemployment fund.


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Colorado Uses Two Formulas to Calculate

UnemploymentBenefits

- actual benefits are based on the formula that

results in the highest weekly amount

coworkforce.com


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Formula 1:

- total wages paid for th

eh

igh

est two consecutivequarters in the base period

- total earnings from that period is divided by 26

weeks

- multiply by 0.6 to determine weekly benefit

amount

According to Colorado law, this weekly benefit amount

currently cannot exceed $454 per week, or be less than

$25.


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Formula 2:

- total wages in 12-month base period

- divide by 52 weeks

- divide by 2 to determine weekly benefit amount

According to Colorado law, this weekly benefit amountcurrently cannot exceed $500 per week or be less than

$25.


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Suppose you make $50,000 per year.

You file for unemployment on 10/14/2011.

Formula 1:wages for 2 quarters =

= 50,000 / 2

= 25,000

divide by 26 weeks =

= 25,000 / 26

= 961.54

multiply by 0.6 =

= 961.56 x 0.6

= $576.94

= $454


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Formula 2:

total 12 month wages = $50,000

divide by 52 weeks =

= 50,000 / 52= 961.54

divide by 2 =

= 961.54 / 2= 480.77


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Your benefits are estimated to be $480.77 per week.

How much of your weekly earnings are replaced?

480.77 / 961.54 =

= 0.5

= 50%


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Eligibility:

- unemployed through no fault of your own

- able to work

- available for work

- willing to seek and accept suitable work

- register with a workforce center


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Financing:

Employers pay UI premiums.

The initial rate is made up of (2010 data)

-base rate (0.0170)

- prescribed surcharge (0.0022)

- solvency surcharge (0.0060)

The UI rate is applied to the first $10,000 of each

employee's annual earnings.

Rates change with experience.


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Different liability criteria for:- domestic employers

- nonprofit corporations

- agricultural employers

- construction

- based on amount of wages paid and the number of

employees


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Which employers?

1. business that paid wages of at least $1500 in a

calendar quarter during the prior or current calendaryear

2. business that employed at least one person for any

part of a day in 20 weeks during the prior or currentcalendar year


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Disability Insurance in Colorado

Disability Determination Services (DDS) is the

Colorado State Agency that makes the disability

decisions for Social Security.

Social Security pays the State to run the office and make

the decision.

Benefits are same as full-retirement benefits from SocialSecurity.


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Applicants must have a medically determinable physical or

mental impairment that is expected to

- result in death

- last for at least 12 consecutive months

- prevents person from performing the work

related activities of their previous jobs or anyother jobs which they might be able to perform

based on their age, education, and work experience


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Social Security has two disability programs:

1. Supplemental Security Income (SSI) pays disability

benefits if you worked long enough and paid SocialSecurity taxes.

2. Social Security Disability Insurance (SSDI) pays

disability benefits based on financial need.


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Workers Compensation in Colorado

All public and private employers in Colorado mustprovide workers' compensation coverage for their

employees if one or more full or part-time persons are

employed.

Exceptions:

- casual maintenance / repair work performed for a

business for under $2,000 per year

- certain domestic work, maintenance or repair work

for a private homeowner that is not done full time


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- licensed real estate agents and brokers working on

commission

- independent contractors who perform specific for-hire

transportation jobs

- drivers under a lease agreement with a common or

contract carrier

- volunteers for a ski area operator

- Federal employees & Railroad employees (covered

under federal laws)


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Moral Hazard and SI

Figure 14-3: Exit rate from unemployment


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Figure 14-5: Labor Force Non-Participation of Older

Men and Growth in DI

Pub Econ_lecture_14_SI Programs in CO

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