Fact Sheet 146 - Obligation Assessment

Who pays the Obligation Assessment (OA)?

All contributing employers pay the obligation assessment until the debt, loan, or bond(s) are repaid.

How will the Obligation Assessment be billed?

It will not be billed; however, when an obligation assessment is in effect, it will be included as a part of the annual tax rate determination. The obligation assessment rate will be determined yearly and is included in the annual Tax Rate Determination.

Why was it included in the tax rate statement?

It was determined that it would be easier for employers if the OA was a percentage factor added to the annual tax rate. An employer will multiply their taxable wages, quarterly, by their total tax rate (which includes the Obligation Assessment). By doing it in this manner, it permits an employer to pay the assessment based on the allocation of the wages paid to his employees, instead of a lump sum payment.

Will the Obligation Assessment be the same for all employers or a percentage of an employer's experience account?

One of the components of the OA is based on the employer's individual tax rate; therefore, the amount will vary.

Will it be credited to an employer's experience account?

No, similar to the solvency tax, interest and penalty charges, it is not credited to an employer's experience account.

How is it calculated?

The OA is structured to incorporate the employer's experience rate and a base assessment per employee. The calculation of the OA takes into consideration the employer's current tax rate, the OA ratio, a base assessment, and the taxable wage base.

• Example: The OA ratio in 2019 was 0.166825, the base assessment was $63 and the taxable wage base was $9,000. The formula is: (2019 tax rate × OA ratio) + (base assessment + taxable wage base)

When calculating your individual OA rate, you would use the tax rate that is shown on your tax rate determination form.

Example using 2019 tax year:

• Employer's 2019 Tax Rate is 2.4% = 0.0240
• 2019 Obligation Assessment ratio = 0.166825
  • 0.0240 X 0.166825=0.0040038
• 2019 Base Assessment = $63.00
• Taxable Wage Base = $9,000.00
  • $63.00 / $9,000.00 = 0.007
• 0.0040038 +0.007 = 0.0110038, this rounds up to 0.0111, or (times 100) to 1.11%

Enter the tax rate from the "Your Computed Rate" field located on your Form UIA 1771, Tax Rate Determination for Calendar Year 2019, and follow the instructions to determine your Obligation Assessment amount.

How is the Obligation Assessment Ratio (OAR) determined?

The OAR is set by the State Treasurer & the Director of UIA on or before November 20th of each tax year.

Can you explain the formula used?

• Tax Rate - The tax rate issued on Form UIA 1771, Tax Rate Determination for the involved calendar year.
• Obligation Assessment Ratio (OA Ratio) - The OA Ratio is used to calculate the experience-based cost of the Obligation Assessment rate. The formula for the OA Ratio is as follows:
  • Principal, interest, and administrative expenses due on bonds / Anticipated regular Ul revenue from contributing employers due in involved calendar = OA Ratio
• Base Assessment - The base assessment is a flat rate that is assessed to all covered employees.
• Taxable Wage Base - The taxable wage base is the amount of an employee’s wages that is taxed by the Unemployment Insurance Agency each calendar year and is payable by the employer.
  • The default taxable wage base is set at $9,500.
  • The Michigan Employment Security (MES) Act provides for a reduced taxable wage base if the UIA Trust Fund balance reaches or exceeds $2.5 Billion for two consecutive calendar quarters.

Is the Bond (OA) appealable?

No, this is not an unemployment insurance tax assessment determination; therefore, it cannot be protested or appealed.

It is a statutory amendment to the Michigan Employment Security (MES) Act.

If I received a Redetermination, will the Obligation Assessment change?

Yes. Since the tax rate is a part of the formula to determine the Obligation Assessment, any circumstance that would cause the employer's tax rate to change will also change the OA rate.

Fact Sheet 146- Obligation Assessment

Updated August 2026