4 Risks You Face if You’re Not Outsourcing Unemployment Claims Management
Many organizations view unemployment claims and unemployment insurance (UI) taxes as the cost of doing business. They don’t perceive claims management as a function that needs much attention, and they don’t believe it can help them achieve important business objectives.
These businesses try to make do by tasking an internal team member to take on unemployment claims management, often without the necessary expertise or bandwidth. By choosing not to outsource unemployment claims management, they expose the organization to four types of risk: financial, compliance, operational, and strategic.
The Financial Risk: Higher Unemployment Claim Costs, Higher UI Taxes
Many unemployment claims are actually winnable. But if you view them as unavoidable administrative transactions and simply process them as they come in, your unemployment claim experience rating will be higher. And the more unemployment benefits paid against your UI tax account, the higher your UI rate. That’s more money spent on UI taxes year after year, unnecessarily.
Even something as simple as filing an unemployment claim after the state’s deadline increases your financial risk. The claim will now be considered non-protestable. So even if it’s invalid, you won’t have any recourse; the claimant will receive benefits, charged against your UI account. If your team doesn’t have the time or knowledge to examine and monitor your account diligently, you can easily miss erroneous or fraudulent claims that cost you even more.
Outsourcing unemployment claims management reduces your financial risk.
An experienced unemployment claims management provider will take a proactive, strategic approach to reduce your claim-related costs. Using proven best practices, they’ll help you win more claims upfront and on appeal and reduce the experience rating portion of your UI tax rate, so you’ll pay less UI taxes annually. A reliable partner will also identify fraudulent or erroneous claims and secure claim reversals when appropriate. The savings can be significant and add up quickly: In fact, businesses that partner with UC Alternative save up to 40% or more on their unemployment-related claim costs by leveraging our expertise, proven processes, and industry-leading best practices.
The Compliance Risk: Unemployment-Related Fines & Penalties
Managing unemployment claims involves complying with laws and regulations that vary by state, including strict timelines for filing separation notices and claim responses. Internal employees often lack the time to keep up with these evolving regulations, especially if the organization operates in multiple states.
If you fail to comply with state-specific unemployment claim laws and regulations, you might be subject to fines and penalties—or worse. Let’s say you file a claim response late on a qualified decision that is later reversed on appeal. The state determines that the information you provided in your original claim response was insufficient. Under the Unemployment Insurance Integrity Act, many states have the right to charge you for the benefits the claimant received up to the point of the claim decision reversal.
Outsourcing unemployment claims management helps reduce compliance risk in an ever-changing legal landscape.
An experienced claims management provider keeps current on relevant laws and regulations across all 51 jurisdictions and stays on top of every claim to avoid unnecessary fines and penalties. They have the capacity and expertise to provide diligent oversight, making sure your claims are handled in compliance with evolving, state-specific requirements.
The Operational Risk: Inefficient Processes and Administrative Burdens
Many HR professionals report that managing unemployment claims internally overwhelms and drains their staff. Without a rigorous methodology and industry-leading best practices, it becomes a cumbersome, time-consuming, inefficient undertaking.
For example, it takes both expertise and bandwidth to respond to every unemployment claim timely, accurately, and thoroughly. The burden becomes even greater if the state rules against you and it’s necessary to file an appeal or attend a hearing. With labor scarce and costly, no organization can afford to devote more staff time to these tasks than necessary.
Worse, if your business struggles with high turnover or you’re hiring a large number of employees to support growth, your claim volume will inevitably rise. Eventually, the administrative load may be too great to handle internally.
Outsourcing unemployment claims management reduces operational risk by eliminating inefficiencies and taking the burden off your team’s shoulders.
A knowledgeable unemployment claims management partner takes ownership and accountability for this critical function. They use efficient, time-proven processes to ensure your claim responses are accurate, complete, and submitted timely, with the documentation needed to support a winnable case. By helping you win more claims upfront, your partner will reduce the likelihood of a hearing—saving your team even more time. Your partner will also help you avoid common unemployment claims mistakes that add further inefficiencies.
The Strategic Risk: Less Time for High-Value Work
Most organizations are stretched thin today as they grapple with labor shortages. It’s especially acute in HR, where employees are juggling competing priorities like attracting and retaining talent, improving employee engagement, evaluating and implementing AI, and building a strong culture.
When you tie up your staff looking in the rear-view mirror and managing unemployment claims on behalf of past employees, you take their time and focus away from higher-value, strategic work that benefits your current workforce today and in the future. This labor-intensive function takes time and energy away from your core business and leaves little bandwidth and mind space for strategic human capital management (HCM) initiatives.
Outsourcing unemployment claims management reduces strategic risk by freeing your staff to focus on high-value work.
When you partner with an unemployment claims management provider, you gain back the time and attention to focus on HR endeavors that keep your organization competitive. Your provider takes ownership of claims management and offloads the administrative work from your team, so you can allocate your internal resources more strategically.
Why Outsourcing to UC Alternative Mitigates Your Risks
Leading organizations recognize they can’t afford the financial, compliance, operational, and strategic risks of keeping the unemployment claims management function in-house. Instead, they’re opting to outsource unemployment claims management.
As your solutions partner, UC Alternative takes ownership and accountability of your unemployment claim function. We apply deep knowledge, unrivaled expertise, and over three decades of experience to drive down your claim-related costs, help you comply with relevant laws and regulations, take the administrative burden off your team, and free them to focus on strategic work. All with a human touch customer service model that’s one-of-a-kind in the industry.
Unlike vendors that charge a flat fee for unemployment claims management, UC Alternative applies a performance-based fee model. This unique pricing approach gives our team a strong incentive to deliver better results, through more claims won, a better experience rating, and a lower UI tax rate. Our clients realize a UI tax rate that is among the lowest for their industry in their state—driving significant savings to the bottom line.
Learn how you can reduce your financial, operational, compliance, and strategic risks by outsourcing unemployment claims management by requesting a savings projection for your business.
