In 1972, Congress gave 501(c)(3) nonprofit organizations an alternative to paying State Unemployment Insurance Tax. The Unemployment Services Trust (UST) was established by state nonprofit  associations for the benefit of their members. Participating organizations own the Trust and, in turn, own a proportionate share of the Trust's assets.

How the Unemployment Services Trust Works

If you participate in UST, you withdraw from your state's unemployment insurance tax system, as permitted by federal law. Instead of paying the SUI tax, you make quarterly payments to the Trust. For the first two years, your savings average 25% less than the amount you were paying in SUI tax. Thereafter, your payments are based on actual claims experience of your own employees. For agencies with a relatively stable workforce, contributions will gradually develop an adequate reserve for future claims. As the member account grows, contribution rates decrease and equity in UST builds. In addition, UST purchases stop-loss insurance that provides protection for participants and itself in the event of catastrophic losses.

Your employees are still entitled to all the benefits prescribed under the state law, still apply for benefits at the state unemployment office, and still receive their unemployment checks from the state agency. The difference is that the Trust reimburses the state for benefits paid to your former employees, and your agency will no longer be subsidizing high turnover industries!