Between the new administration and the soaring jobless rate, this figures to be a big year for proposals dramatically changing the unemployment-insurance system. Under the new Obama administration, you’re likely to see proposals on new family leave coverage, new “wage insurance” programs, paid health benefits for the unemployed and extension of the present system to administer new health care mandates. Doug Holmes, president of UWC, Inc., outlined these likely policy goals at the recent National Association of State Workforce Agencies conference:
• increased FUTA taxes. Many policy- and lawmakers agree that the $7,000 FUTA wage base, which hasn’t changed in decades, should be increased and possibly indexed to address trust fund solvency.

• dramatically higher state UI taxes. Trust funds are depleting rapidly, which means states will soon be borrowing to pay claims in unprecedented amounts. Employers should expect sharply higher state employer taxes in 2010 and beyond, and possibly higher federal FUTA taxes to repay loans.

• more pressure on reducing federal administrative funding for UI. That means employers may be paying higher state administrative assessments to make up for it.

• potential new taxes and reporting burdens, as many view the UI system as the natural vehicle for collection of health coverage information and possible new taxes. Both are likely in any national health insurance reform.

• possible new programs such as dramatically expanded Trade Adjustment Assistance, implementation a new “Wage Insurance” program, and a new employer tax credit to pay for COBRA health benefits for the unemployed.

Even if all of these proposals don’t pass, employers can count on continuing to fund the system through state and federal unemployment insurance taxes.

Tags: FUTA, obama, unemployment