Unemployment Insurance FAQ: Answered

March 16, 2018

Unemployment Insurance FAQ: Answered

unemployment insurance faq

Unemployment Insurance can be difficult to navigate for nonprofits and determining your best options can be an overwhelming process. Here are a few common frequently asked unemployment insurance questions…answered.

Q. What is SUTA?

A. The State Unemployment Tax Act, Better known as SUTA, is a form of payroll tax used to pay unemployment benefits for employees who lost jobs through no fault of their own. SUTA is a counterpart to FUTA, the federal unemployment insurance program.

Q. Who pays the SUTA Tax?

A. In most states, employers are solely responsible for paying state unemployment insurance taxes to fund their state’s unemployment insurance system.

Q. Are nonprofits, government and tribal entities liable to pay SUTA?

A. In all states, 501(c)3 nonprofit, government and tribal entities are required to pay for unemployment claims in one of two ways: through unemployment insurance taxes or as a reimbursing (self-insured) employer paying the state only for claims paid out to former employees. Nonprofits are exempt from FUTA.

Q. Are there advantages to opting out of SUTA?

A. The main advantage of opting-out is cost savings. While savings numbers vary, most organization can save between 30-50% a year. Take a look at this REAL savings example from one of our members. 

Q. What are the risks associated with becoming a reimbursing employer?

A. Reimbursing provides no insurance against excessive unemployment claims, creating unprotected liabilities and the cost of reimbursing the state for large UI claims can place an organization’s programs at risk for cutbacks and lead to more unemployment.

Q. Are there options to reduce the risk associated with self-insurance and still save money?

A. The two safest options for nonprofits are enrollment in First Nonprofit’s unemployment programs. The First Nonprofit Unemployment Savings Program grants membership to a limited-liability corporation that provides access to professional claims management services and stop-loss insurance. The Bonded Service Program provides first-dollar coverage plus the same excellent professional claims management services.

Q. How much can my organization save with First Nonprofit Group’s programs?

A. Click here to request a savings evaluation for your organization. The analysis is free and there is no obligation to join!

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NYCON members who use First Nonprofit’s programs enjoy enduring savings and improved efficiency. Our association knows that success, because from the beginning, we achieved the same great benefits. Great savings, seamless technology, and responsive service. NYCON highly recommends First Nonprofit’s remarkable unemployment solutions.

New York Council of Nonprofits, Albany, NY

It has been our sincere pleasure to maintain a strong, vibrant business partnership with First Nonprofit. We greatly admire their strong industry knowledge, technical expertise, constant professionalism, knowledgeable and dedicated staff. They are always extremely responsive, personable and provide us with the necessary guidance and recommendations on a numerous variety of employment scenarios. We are impressed with the accuracy of their employment decisions, integrity of their employees and efficiency of their claim handling. We greatly respect and value the consistent, impressive cost savings from the utilization of their outstanding services.


Thresholds, Chicago, IL

Because INCS advocates for the operating conditions that allow charter public schools to provide high quality public education, partnering with First Nonprofit was an easy decision. First Nonprofit’s unemployment programs provide our member schools two operating elements crucial to their ability to provide high quality public education: savings and budget certainty. Capable, committed teachers are the key to student success. By participating in the unemployment insurance savings plan, charter public schools gain peace of mind and are able to invest more money in their teachers.

Illinois Network of Charter Schools

Throughout our membership in the Unemployment Savings Program, First Nonprofit understood our demands, community dynamics, and the importance of seamless services; that allowed us to serve our constituents better.

Hugh Parry, Retired President of Prevent Blindness America