FAQ About the Cost of Unemployment Insurance
- Are you confident that your staff is doing everything correctly to avoid all unnecessary and unwarranted unemployment compensation claims?
- Have you lost your right to protest claims as a result of missing state-imposed deadlines?
- Do you have the time and resources to keep up-to-date with unemployment laws, regulations, and precedent case law changes in your state(s)?
- Do you track claims by location and department to identify trends and training needs?
- Are the people who process your unemployment claims responsible for delivering periodic reports on how their efforts have reduced your company’s unemployment costs?
- Are the people who do the hiring, firing, and discipline at your company being periodically trained and kept current on law and precedent changes?
- Is someone constantly monitoring your unemployment charges for improper or incorrect state agency charging errors?
If you answered no to any of these questions, your organization is most likely among the employers who are paying more in unemployment costs than they should be.
If you would like to know more about how you can lower your cost of unemployment insurance, give us a call now!
Employers must view unemployment as a variable and controllable expense. Considering that weekly unemployment benefits may amount to approximately 50% of the average wage earner’s weekly gross wages, the potential cost of improperly handling an unemployment claim or benefit charge can become quite expensive for employers. When you respond timely and contest unwarranted claims, you can avoid unnecessary costs.
A recent national GAO (Government Accounting Office) study revealed that nearly one out of every ten dollars in unemployment benefits was an improper payment.
Studies show that some states are making overcharging errors at a rate of 15-20%. Employers should be concerned that these errors are resulting in accidental charges against their state unemployment accounts.
By not having the correct controls in place, an employer is most likely being assessed thousands of dollars in unwarranted unemployment claims, which directly increases their unemployment insurance tax rate and state unemployment costs.
The unemployment insurance system was created by the Social Security Act of 1935 to act as a financial bridge to assist unemployed workers who find themselves out of work through no fault of their own.
In almost every state, the unemployment insurance system is fully funded by the employer community. In fact, every dollar that a former employee collects in unemployment benefits, whether it is warranted or unwarranted, must be reimbursed by that employer to the state via increased unemployment costs. Additionally, every unemployment claim you pay out raises your employer experience rating, and with it your unemployment insurance tax rate. Each claim can affect your employer experience rating for three or more years, costing you even more money.
UI SIDES, also known as SIDES, is an acronym for the Unemployment Insurance State Information Data Exchange System. Backed by the U.S. Department of Labor, SIDES is a web-based system that facilitates the electronic transmission of information between state unemployment insurance agencies, employers, and third-party administrators like UTMC.
Created to support UI integrity and reduce fraud within the unemployment insurance system, SIDES should give employers more time to respond to information requests, eliminate transmission disputes, and improve response rates. It is currently the industry standard for the quickest and most efficient unemployment claims information. Already utilized by 47 states, it is expected that SIDES will become the method of choice of all states regarding the adjudication of unemployment claims.
Since the unemployment insurance program is completely employer funded, all unemployment charges (warranted or not) must be reimbursed dollar for dollar by the chargeable employer. To control these costs, which can exceed twenty-two thousand dollars per claim, employers must comply with constantly changing and stringent state requirements. Financial penalties for mismanagement and noncompliance are costly. Outsourcing to a qualified partner will ensure that your unemployment costs are reined in.
Outsourcing can also reduce your labor costs or increase your employee productivity as your team is relieved of a significant administrative burden. Let UTMC act as your unemployment tax staff, addressing all issues and concerns in the unemployment arena. We will eliminate your costly, unwarranted claims and charges.
Unemployment compensation cost reduction is our area of expertise. Unlike some of our competitors, UTMC is dedicated solely to reducing our clients’ costs and frustrations associated with unemployment matters.
UTMC also differs from other TPAs because we take a very individualized approach to each employer client we serve. No two employers have the same challenges; therefore, we don’t provide a canned, pre-packaged solution to solve them.
UTMC stresses the importance of being proactive versus reactive to avoid unemployment claims. We work closely with supervisory personnel to reap the greatest financial savings for our client companies. By combining your knowledge of the situation with our decades of expertise about unemployment laws and statutes, we position your company for maximum cost savings.
We also provide unmatched service to our clients—and that is true for all of the employers we serve, not just the biggest ones. We reinforce our hands-on approach with advanced technology to generate substantial cost savings for our clients.