Reimbursable Funds: A Comprehensive Overview

Definition and Eligibility

Reimbursable funds are a method of payment used by certain employers to reimburse the unemployment insurance (UI) fund for benefits paid to their former employees. Reimbursable employers are typically governmental agencies or nonprofit organizations described under Section 501(c)(3) of the Internal Revenue Code (IRC).

Key Facts

  1. Definition: Reimbursable funds are a payment method used by certain employers to reimburse the UI fund for the benefits paid to their former employees.
  2. Eligibility: Reimbursable employers are typically governmental agencies or nonprofit organizations described under Section 501(c)(3) of the Internal Revenue Code.
  3. Payment Options: Reimbursable employers have two payment options:
    a. Option One: At the end of each calendar quarter, the employer is billed for the amount due. Nonprofit organizations must reimburse an amount equal to regular unemployment benefits paid plus 50 percent of the amount of extended benefits paid to their former employees. State and local governments must reimburse 100 percent of regular and extended benefits paid to their former employees.
    b. Option Two: The employer may choose to pay two percent of its quarterly taxable payroll to the department within 30 days after the end of each quarter. The department will apply those funds to any outstanding balance owed. At the end of each calendar year, the department will determine whether total payments for the year are less or more than what is owed. If total payments are less, the employer is liable for the unpaid balance. If total payments exceed the amount owed, the excess funds may be refunded or kept as credit toward future payments.
  4. Billing and Payment Schedule: Reimbursable employers receive statements and bills related to the reimbursable benefit charges. The appropriate mail dates for these documents vary by calendar quarter.

Payment Options

Reimbursable employers have two payment options:

  1. Option OneAt the end of each calendar quarter, the employer is billed for the amount due. Nonprofit organizations must reimburse an amount equal to regular unemployment benefits paid plus 50 percent of the amount of extended benefits paid to their former employees. State and local governments must reimburse 100 percent of regular and extended benefits paid to their former employees.
  2. Option TwoThe employer may choose to pay two percent of its quarterly taxable payroll to the department within 30 days after the end of each quarter. The department will apply those funds to any outstanding balance owed. At the end of each calendar year, the department will determine whether total payments for the year are less or more than what is owed. If total payments are less, the employer is liable for the unpaid balance. If total payments exceed the amount owed, the excess funds may be refunded or kept as credit toward future payments.

Billing and Payment Schedule

Reimbursable employers receive statements and bills related to the reimbursable benefit charges. The appropriate mail dates for these documents vary by calendar quarter.

Conclusion

Reimbursable funds provide a flexible payment option for employers who are eligible to use this method. By understanding the requirements and options available, reimbursable employers can ensure that they are meeting their obligations and managing their UI costs effectively.

Sources

  1. Title 12, Chapter II, Subchapter A, Part 219 of the Electronic Code of Federal Regulations (e-CFR)
  2. Reimbursable Method of Paying Unemployment Insurance (UI) Benefits – California Employment Development Department (EDD)
  3. Reimbursable Employers – South Carolina Department of Employment and Workforce (DEW)

FAQs

What are reimbursable funds?

Reimbursable funds are a payment method used by certain employers to reimburse the unemployment insurance (UI) fund for benefits paid to their former employees.

Who is eligible to use reimbursable funds?

Reimbursable employers are typically governmental agencies or nonprofit organizations described under Section 501(c)(3) of the Internal Revenue Code (IRC).

What are the payment options for reimbursable employers?

Reimbursable employers have two payment options:

  1. Option One: At the end of each calendar quarter, the employer is billed for the amount due.
  2. Option Two: The employer may choose to pay two percent of its quarterly taxable payroll to the department within 30 days after the end of each quarter.

How are reimbursable employers billed?

Reimbursable employers receive statements and bills related to the reimbursable benefit charges. The appropriate mail dates for these documents vary by calendar quarter.

What happens if a reimbursable employer does not pay the amount due?

If a reimbursable employer does not pay the amount due, the department may take legal action to collect the debt.

Can reimbursable employers get a refund of excess payments?

Yes, if total payments for the year exceed the amount owed, the excess funds may be refunded or kept as credit toward future payments.

How can reimbursable employers ensure they are meeting their obligations?

Reimbursable employers can ensure they are meeting their obligations by understanding the requirements and options available, and by making payments on time and in full.

Where can reimbursable employers find more information?

Reimbursable employers can find more information by contacting their state’s unemployment insurance agency or by visiting the U.S. Department of Labor’s website.

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