1. SECTION 13-5 pp. 436-439 Workers Compensation and
Unemployment Insurance pp

2. Key Words to Know workers compensation insurance (p. 436)
Insurance that covers employees’ medical expenses and lost wages if they’re hurt on the job.

3. Formula Premium for Workers = Base × Total
Compensation Insurance Rate Payroll

4. Example 1
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?

5. Example 1 Answer
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

6. Key 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.

7. Formulas 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

8. Example 2
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.

9. Example 2 Answer: Step 1 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

10. Example 2 Answer: Step 2 Find the state unemployment tax.
State Tax = State Tax × First $7,000 of
Amount Rate Annual Wages
5.4% × $7,000 = $378.00

11. 438:1-15