Unemployment insurance in Colorado: Funding, benefits, and eligibility
See also: Unemployment insurance programs in the states
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Unemployment insurance is a term that refers to a joint federal and state program that provides temporary monetary benefits to eligible laid-off workers who are actively seeking new employment. Qualifying individuals receive unemployment compensation as a percentage of their lost wages in the form of weekly cash benefits while they search for new employment.[1][2]
The federal government oversees the general administration of state unemployment insurance programs. The states control the specific features of their unemployment insurance programs, such as eligibility requirements and length of benefits.[2]
Although the word insurance is in the term, a few key differences distinguish unemployment insurance from private insurance plans such as home insurance, car insurance, or health insurance. In most states, employers—rather than individuals themselves—pay unemployment taxes that fund state unemployment insurance programs. When an individual loses their employment (and meets eligibility requirements), state-administered unemployment insurance programs provide temporary monetary benefits to the former employee. Unemployment insurance compensation is not intended to replace lost wages; it is designed to replace a portion of the individual's lost wages with the goal of providing financial support as an individual searches for a new job.[3]
This page examines unemployment insurance funding, benefits, and eligibility in Colorado. For more information about unemployment insurance in Colorado, including history, data, and noteworthy events, click here.
For more information about all aspects of unemployment insurance, including history, data, arguments, and reform proposals, click here.
Funding
The unemployment insurance program is funded by state and federal taxes on employers, or unemployment taxes.
While state tax amounts vary, the Federal Unemployment Tax Act (FUTA) tax is 6% of the first $7,000 of an employee's wages. Employers can receive an offset of up to 5.4% of their FUTA tax when they pay state unemployment taxes on time. An employer that receives the full 5.4% FUTA credit, therefore, pays 0.6% of the first $7,000 of an employee's wages, or $42, in FUTA tax per qualifying employee.[4][2]
New employers begin paying into the unemployment insurance system at the new employer rate. Depending on state laws, employers that have paid unemployment insurance taxes for a set time period (usually a few years) receive an experience rating. The more unemployment claims an employer has, the higher their tax rate.[2]
States that exhaust their unemployment insurance program reserves can borrow from the federal Treasury through the Title XII program. States must repay their unemployment insurance program debts within two to three years or the federal taxes on employers in the state automatically increase until the debt is paid. In states that are overdue in repaying unemployment insurance debt to the federal Treasury, the FUTA tax offset is reduced.[4][2]
Benefits
| Colorado Department of Labor and Employment instituted changes to the state's unemployment insurance program during the coronavirus (COVID-19) pandemic. Click here for more information. |
The standard term of unemployment benefits is 26 weeks, but specific terms vary by state. For example, Arkansas paid 16 weeks of benefits as of 2022. Massachusetts, on the other hand, paid 30 weeks of benefits and Montana paid 28 weeks of benefits.[4][5]
The following sections provide information about specific benefits available through Colorado's unemployment insurance program.
Length and amount of standard benefits
The Colorado unemployment insurance program provided up to 26 weeks of benefits as of February 2023. Benefit amounts ranged from a minimum of $25 a week to a maximum of $809 a week.[6][7]
Extended benefits
During periods of high unemployment, extended benefits up to 13 weeks, depending on the state, are available to workers who have otherwise exhausted their unemployment insurance benefits. Extended benefits up to 20 weeks may also be available in some states during periods of extremely high unemployment.[8]
Colorado did not offer extended benefits as of February 2023.[7]
Eligibility requirements
| Colorado Department of Labor and Employment instituted changes to the state's unemployment insurance program during the coronavirus (COVID-19) pandemic. Click here for more information. |
The following sections provide general information about unemployment insurance program eligibility as well as specific eligibility information for Colorado's unemployment insurance program.
Background
Eligibility criteria for unemployment insurance recipients vary by state. In general, recipients must have lost employment through no fault of their own. The unemployment insurance program does not cover individuals who voluntarily leave their positions, who are fired for just cause, or who are seeking to reenter the workforce after a voluntary exit. Nor do unemployment insurance programs generally cover first-time job seekers, students, self-employed individuals, gig workers, or undocumented workers.[1][4]
States also require that recipients meet certain work and wage thresholds. Unemployed workers in most states must have worked for a minimum amount of time or must have received a minimum amount of earnings from their employer (between $1,000 to $5,000 in 2019) in order to be eligible to receive benefits.[4]
States generally require individuals to perform the following tasks in order to maintain weekly eligibility, according to the U.S. Department of Labor:
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Recipients must report their unemployment insurance benefits as part of their gross income on their tax returns.[11]
Colorado eligibility requirements
Unemployment insurance recipients in Colorado must meet the following criteria in order to qualify for benefits:[12]
- Recipients must have lost employment through no fault of their own.
- Recipients must have earned $2500 during the base period—the first 12 months of the 15 months prior to filing a claim.
- Recipients must be unemployed or partially employed and earning less than their weekly unemployment insurance benefits.
- Recipients must be able and available to work.
See also
External links
Footnotes
- ↑ 1.0 1.1 The Wall Street Journal, "How Does Unemployment Work?" February 22, 2021
- ↑ 2.0 2.1 2.2 2.3 2.4 Employment Law Firms, "How Unemployment Works," accessed May 18, 2021
- ↑ Foundation for Government Accountability, "What is 'Unemployment Insurance?'" December 30, 2020
- ↑ 4.0 4.1 4.2 4.3 4.4 Brookings, "How does unemployment insurance work? And how is it changing during the coronavirus pandemic?" July 20, 2020
- ↑ Forbes, "The States With The Best And Worst Unemployment Benefits—And Why They’re So Different," March 17, 2021
- ↑ Colorado Department of Labor and Employment, "FAQs," accessed August 14,2024
- ↑ 7.0 7.1 Center on Budget and Policy Priorities, "Policy Basics: How Many Weeks of Unemployment Compensation Are Available?" accessed February 28, 2023
- ↑ United States Department of Labor, "Unemployment Insurance Extended Benefits," accessed May 19, 2021
- ↑ United States Department of Labor, "Unemployment Insurance Fact Sheet," accessed May 18, 2021
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Internal Revenue Service, "Topic No. 418 Unemployment Compensation," accessed May 18, 2021
- ↑ Colorado Department of Labor and Employment, "Eligibility and Work Search Requirements," accessed February 28, 2023
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