Unemployment Benefit

Also referred to as unemployment insurance, unemployment benefit programs are jointly run by state and federal agencies. These programs provide partial wages to qualifying individuals; typically former employees that have lost their job through no fault of their own. The exact formula used to calculate the benefit paid varies by state, but typically consider:

• Prior Earnings: this may include annual earnings, or the compensation paid over a three to six month timeframe.

• Dependents: some states provide an additional benefit if the unemployed person has dependents. For example, program beneficiaries may receive an additional weekly amount of $25.00 per dependent.

• Payment Caps: while prior earnings are considered as part of the benefits formula, the program may also place an upper limit on the total weekly benefit, which is oftentimes indexed to a state's average salary.

Note: All unemployment compensation benefits are taxable. In addition, individuals that are not fully employed may be entitled to a reduced benefit under their state's program.

During normal economic times, individuals may collect benefits for up to 26 weeks. When unemployment is relatively high, as is the case during a recession, the duration of benefits may be extended.

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