The Emergency Unemployment Compensation tier system in Michigan can be a little confusing. In fact, many of our readers have inquired about Michigan’s status as a tier 3 and 4 state and how the tier system works. Note that sometimes tiers are labeled with roman numerals I, II, III and IV, which mean 1,2,3 and 4 respectively.
This article will look into what Michigan’s Unemployment Insurance Agency offers in terms of the EUC.
The EUC, or Emergency Unemployment Compensation isÂ a federally funded program that provides 34 weeks of extended unemployment benefits –divided in a two-tier system– once basic unemployment benefits expire. Some states, and this is where it gets a little complicated, offer 19 extra weeks of EUC, divided in two additional tiers, tier 3 and 4. For a state to qualify for these extra 19 weeks of EUC it must have an insured unemployment rate of 5.0 percent or higher. As from January, 2010, Michigan qualifies for tiers 3 and 4 of the EUC program.
Employers Do Not Pay the Bill
It is worth noting that employers do not have to contribute for this program. It is federally funded and is over and above a state’s regular unemployment benefits.
Why a Tier System?
The tier system creates a gradual reduction in unemployment benefits as weeks go by. Each tier provides a percentage of a person’s unemployment benefits. The longer people are unemployed the lower their unemployment benefits.
Tier 1 is the first stage in the EUC’s program. It covers the first 20 weeks after regular unemployment benefits expire. During these first 20 weeks people receive 80 percent of what they got through their basic unemployment benefits. For example, if you received $1,000 when receiving regular unemployment benefits, you will receive $800 for the first 20 weeks of EUC.
Tier 2 provides 14 extra weeks of emergency unemployment compensation that start once the first 20 weeks of tier 2 expire. During these 14 week unemployment benefits are cut to 54 percent of a person’s regular unemployment benefits. Following our previous example, if you initially received $1,000, your benefits from week 21 to week 34 will be $540.
Tier 3 provides an additional 13 weeks of EUC. However, this is only offered in states with high unemployment rates, such as Michigan. During these 13 weeks unemployment benefits are cut down to 50 percent of a person’s regular unemployment benefit. Using our original example, if you received $1,000 in basic unemployment benefits, you will receive $500 from week 35 to 47.
Tier 4 provides the final 6 weeks of the EUC program. From weeks 48 to 53 your basic unemployment benefits will be cut down to 24 percent. The guy we have been using as an example would not get a check for $240.
Of course, neither basic nor EUC benefits start automatically. You must for apply for them. Our next article will focus on how you can apply successfully for Michigan’s EUC and unemployment benefits program.