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Workers Compensation and Unemployment Insurance
pp. 436-43913-5SECTIONSECTION
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 2 of 15
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Key Words to KnowKey Words to Know
workers compensation insurance (p. 436)
Insurance that covers employees’ medical expenses and lost wages if they’re hurt on the job.
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 3 of 15
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Premium for Workers = Base × Total Compensation Insurance Rate Payroll
FormulaFormula
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 4 of 15
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The base rate for workers compensation insurance for underground coal mining in one state is $19.89 per $100 paid to employees. The total monthly payroll for a small underground mine is $76,800.
What is the monthly premium for workers compensation insurance?
Example 1Example 1
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 5 of 15
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Step: Find the premium for workers compensation insurance.
Base Rate × (Total Payroll ÷ $100)
$19.89 × (Total Payroll ÷ $100)
$19.89 × ($76,800 ÷ $100) = $15,275.52
Example 1 AnswerExample 1 Answer
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 6 of 15
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Key Words to KnowKey Words to Know
unemployment insurance (p. 437)
A federal and state program that provides financial aid to qualified persons who, through no fault of their own, become unemployed.
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 7 of 15
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State Tax = State Tax × First $7,000 Amount Rate of Annual Wages
Federal Tax = 6.2% – First 5.4% Rate of State Tax Rate
Federal Tax = Federal Tax × First $7,000 Amount Rate of Annual Wages
FormulasFormulas
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 8 of 15
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A contractor has four employees. It has some unemployment during the year and must pay a state unemployment tax (SUTA) of 5.4 percent. That leaves 0.8 percent (6.2% − 5.4%) for the federal unemployment tax (FUTA).
Art Echoke earns an annual wage of $24,750. Compute his federal and state unemployment tax.
Example 2Example 2
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 9 of 15
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Find the federal unemployment tax.
Federal Tax Rate = 6.2% – 5.4% = 0.8%
Federal Tax = Federal Tax × First $7,000 of Amount Rate Annual Wages
0.8% × $7,000 = $56.00
Example 2 Answer: Example 2 Answer: Step 1Step 1
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Copyright © Glencoe/McGraw-Hill MBA, Section 13- 5, Slide 10 of 15
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Find the state unemployment tax.
State Tax = State Tax × First $7,000 of Amount Rate Annual Wages
5.4% × $7,000 = $378.00
Example 2 Answer: Example 2 Answer: Step 2Step 2
438:1-15438:1-15
