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Monday, July 29, 2013

The Impact of Sequestration on Unemployment Insurance Benefits: Frequently Asked Questions

Katelin P. Isaacs
Analyst in Income Security

Julie M. Whittaker
Specialist in Income Security

“Sequestration” refers to a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. Most recently, sequestration was triggered by the Budget Control Act of 2011 (BCA; P.L. 112-25) and implemented on March 1, 2013 (delayed by P.L. 112-240).

Some, but not all, types of unemployment insurance (UI) benefits are subject to reductions under the BCA sequester. Regular Unemployment Compensation (UC), Unemployment Compensation for Ex-Servicemembers (UCX), and Unemployment Compensation for Federal Employees (UCFE) benefits are specifically exempt from the sequester reductions. UI payments from the Extended Benefit (EB) and Emergency Unemployment Compensation (EUC08) programs, however, are subject to the sequester reductions. States administer all types of UI benefits. Therefore, states are responsible for carrying out the sequester reduction in UI benefit payments. The amount and method by which a UI recipient’s benefit is reduced varies by the state and by the date when the reduction begins.

This report provides brief answers to some frequently asked questions regarding sequestration and unemployment insurance benefits.

Additional information on UI programs and benefits is available in CRS Report RL33362, Unemployment Insurance: Programs and Benefits, by Julie M. Whittaker and Katelin P. Isaacs; and CRS Report R42444, Emergency Unemployment Compensation (EUC08): Current Status of Benefits, by Julie M. Whittaker and Katelin P. Isaacs.

Additional information on modifications to UI programs and benefits as a result of recent changes to state laws is available in CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws, by Katelin P. Isaacs.

More general information on the sequester is available in CRS Report R42050, Budget “Sequestration” and Selected Program Exemptions and Special Rules, coordinated by Karen Spar.

Date of Report: July 2, 2013
Number of Pages: 9
Order Number: R43133
Price: $19.95

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