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Premiums are contributions paid by Colorado employers to help protect the economy. We administer these contributions by paying unemployment insurance benefits to persons unemployed through no fault of their own.
The premium rate for most employers (who are not a new employer) is primarily a function of three components:
With these three variables, the Percent of Excess is calculated using the following formula1:
(Premiums Paid - Benefits Charged) / Average Annual Payroll = Percent of Excess
With any given Rate Schedule2, the Percent of Excess determines the rate assigned:
Ensuring accurate and proper payments is important for all employers, but is especially significant for small to midsize employers because of the effect on smaller businesses when payments are not made properly. Due to economies of scale, the account and rate for smaller employers can be more heavily impacted by benefits charges than that of larger employers. However, it is the responsibility of all parties, regardless of business size, to engage in accurate reporting.
The following examples illustrate how additional benefit charges3 may impact the rate calculation for employers who are not brand-new employers. Employers must go to the Colorado Employment Security Act (CESA), section 8-76-102.5, to view the Standard Premium Rate Schedule. The base rate assigned is based on the 2020 Premium Rates for the Reserve Ratio from .008 to.011 due to the level of the Trust Fund as a proportion of total subject wages.
Example: Small Employer - No benefits paid
A small business employs three individuals in a nonconstruction industry. The employer has four years of payroll experience and a computed rate.
Example: Small Employer - Benefits paid
Example: Large Employer - No benefits paid
A large business employs 200 individuals in a nonconstruction industry. The employer has four years of payroll experience.
Example: Large Employer - Benefits paid
The net impact on each employer’s rate is the same, but the monetary amount of benefits charged are vastly different.
On any single claim, large employers, based on scale, are better able to absorb benefit charges than small employers.
If you have benefits charged against your account, you will receive Form UIA-20, Statement of Benefit Charges, in the mail in the quarter after the charges occur. You have 60 days from the date the Statement of Benefit Charges is mailed to protest that statement.
If you believe there is an error in the figures used to calculate your rate, you may file a written protest within 30 days from the date that appears on the Form UITR-7, Your Unemployment Insurance Rate Notice.
1The resulting Percent of Excess determines the rate assigned according to the rate schedule.
2The Premium Rate Schedule used for all Colorado premium-paying employers is determined by the Reserve Ratio. The Reserve Ratio is an indicator of the health of the unemployment compensation fund. A high ratio indicates a strong fund level and is reflected in a low rate schedule. A low ratio indicates a weak fund level resulting in a high rate schedule.
3The amount charged to an employer’s account is based on the benefits paid. Whether or not an individual is paid, and how much, depends on many factors such as reasons the individual separated, whether the individual meets the weekly requirements, and how quickly the individual returns to work.
UI Employer Services
303-318-9100 (Denver-metro area)
1-800-480-8299 (outside Denver-metro area)