What unemployment solutions are available to nonprofit organizations?
Federal law allows 501(c)(3) nonprofit organizations the option to reimburse the state for unemployment benefits paid to their separated employees instead of paying State Unemployment Insurance (SUI) tax.
Nonprofit employers often overpay within the tax system because a portion of their taxes subsidizes other employers. Therefore, becoming a “reimbursing” employer could be financially beneficial. With limited information we can provide indications to determine if an employer is paying a fair amount of SUI tax or alternatively, if they are overpaying and thereby a good candidate for our program.
With our first-of-kind admitted insurance program, reimbursing employers can transfer their unemployment reimbursement risk to an "A+" (Superior) A.M. Best-rated insurance carrier. By transferring risk to a fiscally strong insurance company, we can help nonprofits save money and provide financial security, which allows them to allocate their money toward their mission.
This program is available for nonprofit organizations that have a gross annual payroll of at least $1 million and are a registered 501(c)(3) organization. Eligible employers can potentially save 30% or more each year versus the taxpaying alternative if their SUI tax payments exceed the amount of actual benefits paid to separated employers. The following are actual savings for some of our clients.
|Type||State||Annual Payroll||Annualized Savings|
|Health Center||CA||$20 million||56%|
|Services for the Disabled and Elderly||IL||$2 million||54%|
|Human Services Organization||OR||$4 million||43%|
|Charter School||PA||$17 million||57%|
What coverage options are available?
The Unemployment Contractual Liability (UCL) policy is a proprietary form that indemnifies the employer for their obligation to reimburse the state for unemployment benefits paid to separated employees, subject to meeting the terms and conditions of the policy. Great American will pay the states for benefits covered under the policy taking the administrative burden off the employer. This admitted program is available in Washington D.C. and all states except NY.
- First Dollar Insurance – Coverage attaches immediately and provides greater budget certainty for covered benefits.
- Stop-Loss Insurance – Coverage attaches excess of the Self-Insured Retention (SIR). The SIR is negotiable to meet the varying needs and risk tolerance of each insured.
Policy Limits are negotiable and customizable for each employer. Additionally, an Experience Refund Endorsement is available on First Dollar coverage meaning insureds with favorable loss experience can receive earned refunds or have them applied toward future premium payments.
What nonprofit unemployment services are available?
To help keep nonprofit organizations safe from needless unemployment costs, an unemployment insurance program needs to include claims administration and risk management services.
Our program includes:
- Professional Claims Administration, with claims management, hearing representation, unemployment cost management training and state reimbursement processing.
- Re-employment Services for separated employees, with group coaching, job positioning and job search training.
- State Unemployment Bonds when collateral is required by state law.
- SIR Reserve Account Administration, for insureds who have Stop-Loss Insurance, which provides interest on invested funds.