Executive Order Relating to Unemployment Insurance Contributions Frequently Asked Questions - Unemployment Insurance
1. How will this Executive Order impact employer tax rates for 2021?
The Executive Order prevents employer tax rates from increasing due to unemployment insurance benefits that were paid to former employees during the COVID-19 pandemic. It accomplishes this goal by maintaining each employer’s benefit ratio used to calculate their 2020 tax rate in the calculation of their tax rate for 2021. Therefore, all chargeable benefits paid to former employees from July 1, 2019, to June 30, 2020, will not impact employer tax rates for 2021.
However, due to the change in the applicable Tax Table, all employers will still see an increase in their tax rate for the calendar year 2021. Since the beginning of the pandemic, over $1.5 billion in benefits have been awarded from the Unemployment Insurance Trust Fund. Based on the balance of the Trust Fund, Maryland employers will be taxed under Table F in 2021.
Even so, the Executive Order maintains the 2020 benefit ratio for employers in 2021, which will ultimately reduce many employers’ tax rates from what they would have been without the Executive Order. For example, an employer with a benefit ratio between .0163 and .0189 in Table A had a rate of 2.10%. But, in Table F, the rate for that same benefit ratio will be 4.90%. Without the Executive Order, an employer’s benefit ratio might have increased based on their pandemic experience, so their tax rate would be even higher than 4.90%.
2. How will an employer’s 2021 tax rate be calculated under the Executive Order?
An employer’s 2021 tax rate will be calculated based on their pre-pandemic experience by excluding fiscal year 2020 and instead use the experience from the three (3) fiscal years of 2017, 2018, and 2019:
|Fiscal Year||Fiscal Year Period in Fiscal Year|
|2017||July 1, 2016 - June 30, 2017|
|2018||July 1, 2017 - June 30, 2018|
|2019||July 1, 2018 - June 30, 2019|
3. If an employer was assigned the new employer rate last year, what rate will an employer receive for 2021?
If an employer received the New Employer rate for calendar year 2020, the employer will again receive the New Employer rate (2.6%) for calendar year 2021.
4. If an employer won an appeal for their 2020 experience rate and was assigned a new benefit ratio, will the new ratio be used for 2021?
Yes, the 2021 benefit ratio will represent the final ratio provided for the calendar year 2020.
5. When will employers receive their tax rates for calendar year 2021?
Employers will receive their preliminary tax rate for calendar year 2021 in their BEACON portal in the latter half of December. Employers will receive their Experience Rate Notice early in 2021.
6. Can an employer appeal the assigned rate for calendar year 2021?
Yes, an employer will be able to appeal the Experience Rate Notice and request a review determination within 30 days after the Experience Rate Notice is sent by the Maryland Department of Labor.
7. Will employers be able to pay their taxes in a payment plan?
Yes, payment plans will be available in 2021 for employers who qualify. For additional information, please submit any questions you may have by completing the Inquiry Form.