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Options to Extend the Duration of Unemployment Insurance Benefits [i] (September 2002)

handle is hein.congrec/cbo0720 and id is 1 raw text is: OPTIONS TO EXTEND THE DURATION OF UNEMPLOYMENT INSURANCE BENEFITS September 25, 2002 The unemployment insurance (UI) program provides temporary income support to workers who lose their jobs. In most states, eligible unemployed workers can receive up to 26 weeks of benefits, funded by the states through payroll taxes on employers. A second level of benefits is available in states with especially high unemployment. UI recipients in those states can receive up to 13 additional weeks of benefits under the federal/state extended benefit (EB) program, financed equally by federal and state payroll taxes. Earlier this year, the Congress enacted the Temporary Extended Unemployment Compensation Act of 2002, as part of the Job Creation and Worker Assistance Act (Public Law 107-147). This legislation provides up to 13 weeks of federally funded unemployment insurance benefits to workers in all states who exhaust their entitlement to regular state unemployment benefits (TEUC), and up to 13 additional weeks of federally funded benefits to workers in states with especially high unemployment rates (TEUC-X). The last week for which benefits may be paid under this program is the week ending December 28, 2002. This memorandum provides information about the UI program and about options for extending benefits relevant to decisions the Congress will need to make if it considers whether to renew the temporary program, as well as whether to make changes in the permanent EB program. Other approaches could complement, or substitute for, the basic approaches examined in this memo. Their costs could be higher or lower than the illustrative options presented in this memo, depending on the specific option. For example, costs could be higher if benefits were made available to eligible unemployed workers for longer periods than provided in the illustrative options or if new benefits, such as health insurance subsidies, were offered as well. Costs could be lower if the federal government transferred funds from federal unemployment insurance accounts to state accounts programs for states to use as they determine, instead of specifically funding additional benefits.0) Key Provisions of Current Law Both federal and state laws affect the provision of UI benefits to jobless workers. The federal government finances administration of the UI program, funds benefits for certain groups of unemployed workers, and provides general guidelines and some restrictions on the operation of state UI programs. Within the constraints of federal law, states develop benefit and tax structures to meet the needs of workers and employers in their boundaries. The states establish eligibility requirements for UI benefits, determine the duration and amount of regular UI benefits, and specify state payroll taxes. Two levels of UI benefits are permanently available under current law. The first level of UI consists of regular state benefits, which provide up to 26 weeks of assistance in nearly all states. The maximum duration and the weekly amount of benefits for each worker are generally determined by the amounts of employment and earnings during a recent one-year base period.

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