EXPERIENCE RATING AND

PRE-PAYMENT VERIFICATION

AN OVERVIEW OF THE RAILROAD UNEMPLOYMENT

INSURANCE ACT (RUIA) CLAIMS PROCESS AND

EXPERIENCE RATING SYSTEM.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

OVERVIEW

• RUIA Benefits Definitions

• Qualifying for Benefits

• Applications and Claims Processing

• Prepayment Verification

• Reconsideration Process

• Experience Rating

• Resources for Employers
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

RUIA BENEFITS DEFINITIONS

• Unemployment Insurance (UI)

◦ Benefits payable to claimants who are not working but 

ready, willing and able to work

• Sickness Insurance (SI)

◦ Benefits payable to claimants who are unable to work due 

to illness or injury

• Benefit Year (BY)

◦ 12 month period generally beginning July 1 and ending 

June 30 the following year

• Base Year

◦ Calendar Year immediately preceding benefit year 

(January – December)
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

QUALIFYING FOR BENEFITS –

CURRENT BENEFIT YEAR (BY)

• Current Benefit Year (BY-21) began July 1, 2021 –

ends June 30, 2022

• Need earnings of $4,137.50 in Base Year 

(Calendar Year 2020)

◦ Counting no more than $1,655 in earnings per month

• New employee also needs 5 months of creditable 

service in base year (2020) if it is first year of 

railroad work 

Note: The amount of compensation required in a base year to qualify for 

benefits is not less than 21⁄2 times the monthly compensation (earnings) 

base.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

QUALIFYING FOR BENEFITS

Benefit Year 

(BY)

(July 1 –

June 30)

Base Year

(Calendar

Year before 

BY)

RUIA Earnings 

Needed to 

Qualify

Monthly Base 

Year

Compensation

Amount

2020 2019 $4012.50 $1605.00

2019 2018 $3900.00 $1560.00

2018 2017 $3862.50 $1545.00

2017 2016 $3637.50 $1455.00

Employees must also have 5 creditable months of railroad 

service if the base year is their first year working for a covered 

employer.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

BENEFIT RATES AND DURATION

• Waiting Period 

• Daily Benefit Rate

◦ Currently $82.00 /day

◦ Benefits Exempt From Sequestration Until 30 Days after 

National Emergency Concerning COVID-19 Terminates

• Duration of Benefits

◦ Normal Benefits – Maximum of 130 Days

◦ Extended Benefits for those who exhaust

• Must have 120 creditable railroad service months

Certain Benefit Flexibilities are Currently In Place Visit 

RRB.gov/Benefits/Coronavirus or call the RRB Toll-Free 

Number 1-877-772-5772 for Further Information.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

APPLICATIONS AND CLAIMS

PROCESSING

• Forms are considered filed when they are received at an office of the RRB.

◦ Postmark may also be considered

• Unemployment: 

◦ Application - Form UI-1

◦ Claim – Form UI-3

• Sickness Benefits:

◦ Application – Form SI-1A/B

◦ Claim – Form SI-3

• UI-1, UI-3 and SI-3 may be filed online

◦ Employees must establish account through Benefit Online Services by visiting 

RRB.gov/myRRB and clicking on the button labeled “Sign In with LOGIN.GOV”.

◦ Password Request Code (PRC) automatically issued if claimant files application and 

no online account exists

◦ Certain Benefit Flexibilities are Currently In Place Visit RRB.gov/Benefits/Coronavirus 

or call the RRB Toll-Free Number 1-877-772-5772 for Further Information.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

ACCESSING BENEFIT ONLINE SERVICES THROUGH

WWW.RRB.GOV
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

SICKNESS APPLICATION PROCESSING

Applicant 

submits 

SI-1 A/B 

(Application) 

RRB 

determines if 

claimant 

qualifies

Eligibility 

investigation 

completed If 

necessary

SI-3 (claim) 

released to 

employee

Sickness applications (SI-1AB) must 

be filed within 10 days of the first day 

an employee wants to claim to be 

considered timely. * Benefit 

Flexibilities are Currently In Place -

Visit RRB.gov/Benefits/Coronavirus 

SI-1AB 

must be 

filed by 

paper/mail
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

UNEMPLOYMENT APPLICATION

PROCESSING

Applicant 

submits UI-1 

(Application) 

RRB 

determines 

if claimant 

qualifies

Eligibility 

investigation 

completed If 

necessary

UI-3 (claim) 

released to 

employee

Unemployment applications (UI-1) 

must be filed within 30 days of the 

first day an employee wants to claim

UI-1 may 

be filed 

online or by 

paper/ mail
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

RUIA CLAIMS PROCESSING

UI-3/SI-3 

claim form 

submitted and 

entered

Pre-Payment 

verification 

(3 business 

days)

Claim 

Processes 

and payment 

info sent to 

US Treasury

Claimant 

receives 

payment 

UI-3 claims must be received within 15 days * 

SI-3 claims must be received within 30 days * 

* # of days from last day in the claim period or date 

mailed to claimant

Claims may 

be filed 

online or by 

paper/ mail
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

ELIGIBILITY CONSIDERATIONS

• Able/Available for Work

• Remuneration / Earnings Test

• Social Insurance Offsets

• Pay for time lost / Injury settlements

• Voluntary Quit (VQ)

◦ Good Cause

◦ Not Good Cause

◦ Not VQ

• Separation Allowance 

◦ May be considered VQ

◦ Disqualification Period
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

PREPAYMENT 

VERIFICATION

Process
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

PRE-PAYMENT VERIFICATION

Overview:

• Definition of Prepayment Verification

• Methods of Notification – ID-4K and ID-4E

• Who Receives Prepayment Notices?

• Time Frame for Responding

• Information Employers Should Provide...
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

PRE-PAYMENT VERIFICATION

What is Prepayment Verification?

• Prepayment verification allows employers 

to provide information to assist the RRB in 

determining if sickness or unemployment 

benefits are payable.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

PREPAYMENT VERIFICATION

Methods of Notification

ID-4K Prepayment Notice of Employee’s Application and 

Claims for Benefits under the RUIA

• Form ID-4K - Paper

• File Transfer Protocol (FTP)

◦ Electronic Transmission 

• BN, UP, NS, CSX

• Employer Reporting System (ERS)

Note: Quality Reporting Service Center 

Phone: 312-751-4992 Email: QRSC@RRB.GOV
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

PREPAYMENT VERIFICATION

Who Receives Prepayment Notices?

• Notices for unemployment benefit claims 

are sent to the last employer because that 

employer can verify the reason for 

unemployment and report any 

remuneration that may be paid.

• Notices for sickness benefits are sent to 

the base year employer because most 

often the last employer and the base year 

employer are the same.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

PREPAYMENT VERIFICATION

Time Frame for Responding

• 3 Business Days....

◦ From the day the RRB transmits the file.

◦ Does not include weekends and Federal 

holidays.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

PREPAYMENT VERIFICATION – ID-4K

Information Employers Should Provide...

UI:

• Erroneous days claimed

• Reason for unemployment is incorrect

• Voluntarily absent from work

• Refusal of suitable work

• Claimed unemployment benefits while sick

SI:

• Erroneous days claimed

• Claimed sickness benefits when they were able to work
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

FORM ID-4E NOTICE OF RUIA CLAIM

DETERMINATIONS

• Once a claim is paid...an ID-4E is released.

◦ Form ID-4E - Paper

◦ File Transfer Protocol (FTP)

• Electronic Transmission 

– BN, UP, NS, CSX

◦ Employer Reporting System (ERS)
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

RECONSIDERATION 

PROCESS
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

RECONSIDERATION PROCESS –

OVERVIEW

Initial Recon H&A Board US Court 

of Appeals

Initial determination is made to pay or deny benefits

Reconsideration request may be filed within 60 days of initial 

determination (Field Service handles UI and Recon Unit handles SI)

Appeal may be filed with Hearings and Appeals Unit within 60 days of 

recon decision using HA-1 (Claimant) / HA-1EMP (Employer)

Appeal may be filed with Board within 60 days of H&A decision using 

HA-1 (Claimant) / HA-1EMP (Employer)

Appeal may be filed with US Court of Appeals within 90 days of Board 

decision
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

RECONSIDERATION PROCESS

UNEMPLOYMENT - EMPLOYERS

Employer Files 

Recon

• Written request for reconsideration filed at RRB

• This is usually after Pre-Payment / Post-Payment process

• Employer provides information advising why they believe claimant should be 

denied day(s)

Field Service –

HQ processes 

Recon

• Field Service – HQ reviews case to determine if day(s) should be denied or 

initial determination to pay sustained and then employer is notified. If denied, 

claimant is notified and action is taken to recover erroneous benefits. If Field 

Service sustains initial determination to pay, employer may appeal.

RRB–H&A, 

Board, US Court 

of Appeals 

• Employer files appeal with Hearings and Appeals (H&A) using form HA-1 EMP 

within 60 days of recon decision notice. H&A Unit reviews case to determine if 

benefits should be allowed or denied. Employer is notified and appropriate 

action taken to recover benefits and notify claimant if necessary.

• Employer may further appeal through RRB Board and US Court of Appeals 
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

FINDING THE HA-1EMP ON WWW.RRB.GOV: 

EMPLOYERS, FORMS, RAIL
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

Available at 

www.rrb.gov
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

EXPERIENCE RATING
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

HISTORY OF THE RUIA EXPERIENCE RATING

SYSTEM

Background

• In the early 1980's, a recession threw large numbers of rail

employees out of work. The RUI Account was unable to cover this

heavy volume of benefit payments and had to borrow from the

Railroad Retirement Account to pay unemployment and sickness

benefits. Although employers eventually paid back this loan from

the retirement account, the need to borrow showed that the RUI

program had funding problems. Therefore, experience rating

provisions were written into the 1988 RUIA amendments to

ensure that the RUI Account could meet its benefit obligations. The first experience-based rates were calculated for calendar year

1991.

Experience Rating Provisions

• Before experience rating, all employers paid the same

unemployment tax rate. Under experience rating, employers pay

variable tax rates that range from 0.65 to 12.00 percent. Employers pay RUI tax on the compensation they report for their

employees. This payroll tax funds the unemployment and

sickness benefit program. A portion (0.65 percent) of that tax or

contribution goes into the RUI administrative fund, which pays

the program's operating expenses.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

HISTORY OF THE RUIA EXPERIENCE RATING

SYSTEM

RUI Funding

• The experience rating system has built-in safeguards to keep it

solvent. For instance, if the RUI Account gets low in funding, a

surcharge is added to all employers' rates to pump money back

into the account quickly. In contrast, if the account is over- funded, all employers share in a pooled credit, which lowers their

tax rates.

Contribution Rates

• To determine an employer's contribution rate, we charge them for

each claim paid to one of their employees. (We notify the

employer of every claim paid via Form ID-4E). Likewise, we credit

the employer if we recover the benefits for any reason. We

compare the net benefits we paid their employees with the

amount of RUI tax they paid. Their RUI tax rate varies each year based on the comparison. We issue annual tax rates by October

15, applicable for the following calendar year.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

EXPERIENCE RATING

Benefit Charging

Single Base Year Employer

• In general, all benefits paid to an employee are charged to his or

her base year employer. This method corresponds with the fact

that qualification for benefits is based upon an employee's service

months and RUIA compensation with the base year employer. This holds true even if the employee is no longer employed by the

base year employer during the benefit year for which the

employee receives benefits. A benefit year begins each July 1. The base year is the previous calendar year.

- For example, John worked for ABC RR in 2019. In January 2020, he worked for XYZ RR and was terminated June 30. John

applies for and receives unemployment benefits in the benefit year that begins July 1, 2020. We will charge ABC RR for the benefits

paid to John.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

EXPERIENCE RATING

Multiple Base Year Employers

• If the last employer recorded on a claim for benefits was also the last base year employer, benefits

payable are charged to that employer until the amount of benefits allocated to that employer equals

the amount of compensation reported by that employer. Any other base year employers are then

charged similarly in reverse chronological order of the date the employee last worked for those

employers. In all other cases, benefit charges are pro-rated among base year employers according

to their share of the base year compensation.

Example of Chronological Charge

If an employee is laid off from Employer A in August 2020 and Employer A was also the last employer

in 2019, then Employer A is charged for the benefits paid. If the benefits charged to Employer A

exceed the 2019 compensation for the employee, benefits are charged to the employer for whom the

employee worked in 2019 before Employer A, if any.

Example of Prorated Charge

An employee works for Employer A in January 2019 and earns $1,605 in creditable RUIA

compensation. The employee also works for Employer B from April through December 2019 and

earns $14,445 in creditable RUIA compensation. The employee works for Employer A from January

to July 2020, at which time the employee is laid off and begins receiving unemployment benefits. The benefits are charged to the two base year employers in proportion to the base year

compensation reported for the employee. Employer A is charged 1/10th and Employer B is charged

9/10th of each benefit payment.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

EXPERIENCE RATING • If benefits charged exceed the reported base year compensation for

all base year employers, the remainder of the benefits is charged to

the system unallocated charge balance.

Exceptions

Benefits are NOT charged to a base year employer if:

- Benefits are paid because of a strike; or

- Benefits are paid to a claimant whose employer is defunct.

The above benefits are charged to the system unallocated charge balance.

Note: No extra benefits paid due to the various COVID-19 legislations are being charged to the railroads. They are funded by the Federal government.

Charge Notice

• Form ID-4E, Notice of RUIA Claim Determinations, or the equivalent notice sent

via RAILINC or ERS, is sent to the employer(s) to notify of the benefit charges.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

EXPERIENCE RATING

Rate Determination Overview

Components of Experience Based Contribution Rate – An

employer's experience rated contribution rate is based on benefit

charges, expenses and credits identified below. The first three

charges are used in the calculation of the basic contribution rate. The remaining are adjustments to the rate. Section 8(a)(1)(C) identifies eight steps in the calculation of the contribution rate

which are described in the next section.

Basic Employer Contribution Rate

The Basic Employer Contribution Rate consists of three components:

1) Allocated-Experience Component

2) Unallocated-Experience Component

3) Pooled Charge or Risk-Shared Benefits Component
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

EXPERIENCE RATING

Overall Contribution Rate

The Overall Employer Contribution Rate consists 

of the basic contribution rate plus adjustments, as

applicable, for the following:

• Administrative Expense 

• Pooled Credit (if applicable)

• Surcharge (if applicable) 
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

EXPERIENCE RATING

Final Rate Adjustment

All contribution rates are adjusted for the minimum and maximum rates in effect at the time.

IF surcharge is... THEN rate is...

0% Minimum – 0.65% Maximum – 12.0%

1.5% Minimum – 2.15% Maximum – 12.0%

2.5% Minimum – 3.15% Maximum – 12.0%

3.5% Minimum – 4.15% Maximum – 12.5%
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

RUIA EXPERIENCE RATING –

DETERMINING THE SURCHARGE RATE

RUI Account Balance * Surcharge Rate Minimum RUIA 

Contribution Rate

Maximum RUIA 

Contribution Rate

Over $100 Million None 0.65% 12%

$50 M - $100 M 1.50% 2.15% 12%

$0 - $50 M 2.50% 3.15% 12%

Less than $ 0 3.50% 4.15% 12.50%

•The Railroad Unemployment Insurance Act provides for the

addition of a surcharge to the RUIA contribution rate if the

accrual balance in the RUI Account falls below certain indexed

levels as of June 30 of each year. On June 30, 2020, that

account had an accrual balance of $53.7 million. However, the

indexed threshold for the 2.5 percent surcharge was $73.7

million. This threshold is the higher of $50 million or $73.7

million indexed to increases in the system compensation base.

Consequently, the 2021 contribution rates for employers other

than new employers will include a 2.5 percent surcharge.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

ANNUAL CONTRIBUTION RATE CALCULATION

A rate is calculated in eight steps, using data through the previous June 30. Items 

underlined appear on Forms ID-40Q or ID-40R/S. Items in italics are defined 

following the table. 

1) Calculate the benefit ratio.

Divide the net benefits charged or the 12 quarters ending June 30, by the 

employer's 3-year compensation base.

2) Calculate the reserve ratio

Subtract the cumulative benefit balance (includes system unallocated charges) from 

the net cumulative contributions balance (less administrative cost plus repayment 

tax and pooled credit) to get the reserve balance. Divide the reserve balance by the 

1-year compensation base. Subtract the reserve ratio from the benefit ratio.

3) Calculate the pooled credit ratio, if any.

Divide the balance in the RUI Account above a specified level ($250,000,000 or 

higher) by 1-year system compensation base. Subtract the pooled credit ratio from 

step 2.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

ANNUAL CONTRIBUTION RATE CALCULATION (CONT’D)

4) Calculate the basic contribution rate.

Multiply adjusted benefit ratio from step 3 by 100 and round to 4 decimal places. 

If less than zero, make zero.

5) Add 0.65% administrative charge.

6) Calculate the surcharge and add to step 5. 

• See the chart "Determining the Surcharge Rate.“

7) Calculate the pooled charge ratio, if any, and add to step 6.

For each employer whose rate is over the maximum or less that zero, multiply their 

1-year compensation base by the portion of the rate outside the limits. If the sum of 

the amounts is positive, divide by the 'adjusted' system compensation base.

8) Reduce rates over the maximum to the maximum and increase rates less that 

the minimum to the minimum rate. See section "Rate Determination Overview" 

for minimum and maximum rates.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

ANNUAL CONTRIBUTION RATE CALCULATION

Net Benefits Charged

• Net benefits charged includes all the benefits paid to employees of the base year employer, except benefits paid by reason of a strike, less all the

benefits recovered which had previously been

charged to the employer.

Rate Notices

• Employers receive Forms ID-40R/S no later than

October 15, which provides information required by law and necessary to pay your contributions

for the next calendar year. Employers receive

Form ID-40Q during the third month after the

end of the calendar quarter which shows the

employer's cumulative benefit charges and

credits and lists their subsidiaries. Employers

may receive these forms by mail or through ERS.
Railroad Retirement Board – Benefitting the Rail Industry Since 1935

HOW WE CALCULATE YOUR CONTRIBUTION RATE

RATE COMPONENT 2020

3 Yr. Net Benefits Charged $23,828,685.10

Divided by 3 Yr. Compensation Base $1,150,800,474.15

Equals the Benefit Ratio 0.0207

Net Contribution Balance $107,011,200.38

Minus the Cumulative Benefit Balance $87,223,000.68

Equals the Reserve Balance $19,788,199.70

Divided by 1-Yr. Compensation Base $404,294,758.10

Equals the Reserve Ratio 0.0489 

Benefit Ratio minus the Reserve 

Ratio Subtotal (times 100) -2.82 (0)*

Plus the RUI Admin Fund Component 0.65 

Plus the Surcharge Rate, if applicable 1.50

Equals the Contribution Rate 2.15%

* If less than 0, then it becomes 0




Railroad Retirement Board – Benefitting the Rail Industry Since 1935

WEBSITE RESOURCES FOR

EMPLOYERS

• RRB Website: https://www.rrb.gov/

• Surcharge Notification: 

https://www.rrb.gov/index.php/NewsRoom/NewsReleases/

RetirementUnemploymentInsuranceTaxes

• Financial, Actuarial & Statistical 

https://www.rrb.gov/index.php/FinancialReporting

• News Releases: 

https://www.rrb.gov/index.php/NewsRoom/NewsReleases