As a result of recently implemented budget cuts, the U.S. Railroad Retirement
Board (RRB) must reduce railroad unemployment and sickness insurance benefits by
These reductions stem from a sequestration order which President Obama filed on
March 1, 2013, in accordance with the requirements of the Budget Control Act of
2011. The sequestration order sets aside a total of $6 million in funding under
the railroad unemployment and sickness insurance program. Given the total amount
of spending under the program, a cut of this size made benefit reductions
The 9.2 percent reduction in railroad unemployment benefits will reduce the
maximum daily benefit rate from $66.00 to just under $60.00. As a result, the
total maximum amount payable in a 2-week period covering 10 days of unemployment
will drop from $660.00 to $599.28.
Certain railroad sickness benefits are reduced for regular tier I railroad
retirement taxes of 7.65 percent. Applying the additional 9.2 percent reduction
to these benefits will result in a daily benefit rate of $55.34 and a maximum
2-week payment of $553.44.
The maximum daily benefit rate will increase to $68.00 on July 1, 2013. For days
of unemployment and sickness after that date, the reduction will result in a
maximum daily benefit rate of $61.74 and a maximum 2-week payout of
$617.44. The maximum daily benefit rate for sickness benefits subject to tier I
payroll taxes will be $57.02, with a maximum 2-week total of $570.21.
The total sequestration is actually spread out over nine years. This initial
reduction will remain in effect through September 30, 2013. The initial
reduction amount is based upon projected claims and benefits and may be adjusted
as needed. Congress will subsequently determine the amount of any reductions in
future years. In addition, any appropriations subsequently enacted in fiscal
year 2013 could also result in changes to the reduction amount.
The law exempts social security benefits, as well as railroad retirement,
survivor, and disability benefits paid by the RRB, from sequestration.
In fiscal year 2012, the RRB paid $11.3 billion in retirement and survivor
benefits to about 573,000 beneficiaries, and net unemployment-sickness benefits
of $89 million to about 26,000 claimants.
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