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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Testimonials

Working with Marshal Whittey at First Nonprofit has been a great experience. He handles our request as a priority and goes above and beyond to resolve any issues we have in a timely manner. Marshall follows through to the end and ensures our needs are met. He has been a great resource for LSC and our “go to” for any tax questions we may have. With LSC transitioning several facilities into one federal tax identification number, First Nonprofit was able to assist and provide guidance with best practices resolving claims to each entity. Additionally First Nonprofit provided knowledge (information materials) and one on one training to HRS group with best practices to handle claims state adjudicated, fraudulent claims, and appeals. And processing information in the First Nonprofit [unemployment claims] system allows for timely information can be collected.

Lutheran Services Carolinas, Salisbury, NC

My experience with FNP has been wonderful. Unemployment in general is quite confusing and FNP has simplified the process for us. Everyone we have reached out to or worked with has been very helpful and follows up to be sure we understand the information. I am so happy we made the switch to FNP!

Stone Valley Community Charter School, Huntingdon, PA

First Nonprofit smoothed the unemployment perils for our organization during Covid. Without the ability to cap our UI exposure, we would not have been able to weather the storm. The program worked perfectly and we have come out of the pandemic ready to forge on. Thanks FNP!

Jewish Silicon Valley, Los Gatos, CA

My experience with the FNP has been fantastic. The idea of setting funds aside for the unemployment tax liability is a bedrock for nonprofit organizations like mine, namely ASHBA; what is even more advantageous is having the FNP as a custodian of those funds. 100% recommended!

American Saddlebred Horse & Breeders Association, Inc., Lexington, KY

I would like to comment on my experience with FNP….to date our District has saved $1,000’s of dollars by being enrolled in the First Nonprofit program. My only regret is that we did not know about this method of paying unemployment tax years ago….as I had figured about five years

ago, had we enrolled 15-20 years ago, we could have saved our small school district upwards of $500,000 in payments to IDES. Also we would have had a pretty hefty sum of money in our Reserve Account. Thankfully I attended a workshop hosted by First Nonprofit back in 2015 which got the ball rolling!

Beardstown Community Unit School District 15, Beardstown, IL

I have worked with the First Non-Profit Team for many years, and I appreciate the quick response and care that Cecilia and the team provides anytime I have questions. While there are other providers that may provide like services, First Nonprofit will always be my first choice! I appreciate you!

Innovative Services, Inc., Green Bay, WI

First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.

Visually Impaired Preschool Services, Louisville, KY

Luckily for us, our interactions regarding any issues with staffing has been very minimal! I can say that all other interactions with regards to billing, 941 reporting, etc. have been extremely pleasant, accommodating and easy to work with. Kim Ghanayem is always prompt, professional and friendly. Thank you so much!

Neurologic Music Therapy Services of Arizona, Phoenix, AZ