Choosing an Unemployment Claims Provider? Here’s What to Consider 

No business wants to spend more time or money on unemployment claims than is absolutely necessary. Yet it can be challenging to manage unemployment claims efficiently and cost-effectively, especially in the face of complex, ever-evolving regulations that differ by state. 

To simplify unemployment claims management and reduce claims expenses, your organization might decide to turn to an outsourced provider for help. Before you take that step, it’s critical to understand which factors should weigh into your decision. When evaluating a potential partner for unemployment claims, keep the following key considerations top of mind. 

Services That Reduce Administrative Burdens: 

One of the primary reasons for outsourcing unemployment claims is to shift the claims processing burden to a third party, freeing your staff to spend less time on this function and more time on tasks that require their expertise. It’s important to ask a prospective vendor what measures they take to expedite claims processing while taking work off your team’s plate. For example: 

  • Does the vendor review all claim notices for completeness and accuracy?  
  • Do they follow processes that equip them to handle claims fast, efficiently, and in compliance with all applicable regulations? 
  • Do they help craft a response to the claim that presents a strong case and increases the odds of winning it upfront? 
  • Can the vendor submit claims and supporting documentation electronically through the State Information Data Exchange System (SIDES)?  
  • Will they provide consultation before your local teams discharge an employee, to ensure they’re following proper procedures and help avoid claim problems later?  

Proven Approaches That Reduce Claims Costs: 

While it’s critical to choose a provider that will speed and simplify your unemployment claims processing, you should view that as the minimum. Your provider also should help reduce your total unemployment claims costs—by claim type and location—through a proactive and holistic approach. For example, providers like UC Alternative leverage their expertise and experience to improve your claims success rate, help you avoid costly and time-consuming appeals, root out fraudulent claims, secure reversals when necessary, and advise you on whether voluntary contributions could be advantageous. 

Strategies to Reduce Your UI Tax Rate: 

One of the key drivers of your organization’s unemployment claims costs is your unemployment insurance (UI) tax rate. The better your claims experience, the lower your UI tax rate and your total claims costs. For that reason, the ideal goal is to eventually reduce your UI tax rate to the lowest possible for your industry, in your state. When evaluating unemployment claims providers, find out if they offer services that help reduce your UI tax rate over time. The provider also should establish realistic annual goals for your UI tax rate, track how it’s trending, and compare your rate to those of peer companies. In UC Alternative’s experience, the right claims management approach can help organizations reduce their UI tax rate by as much as 40% or more in the first three years.  

Performance Metrics That Demonstrate Results: 

An unemployment claims vendor should be able to demonstrate its success by driving down claims costs in measurable terms. For example, UC Alternative is transparent about the fact that we typically reduce our clients’ unemployment claims costs by 40% or more, generating millions of dollars in savings for most companies.  

Support and Guidance Throughout Appeals: 

The unemployment claims process can be difficult and time-consuming, even for valid claims. If you need to appeal an invalid claim, it can cost your organization even more time and money. The unemployment claims provider you select should offer expert guidance and support, helping you navigate the appeals process and achieve a successful outcome. For instance, UC Alternative prepares witnesses for appeal hearings and follows a blueprint that’s proven to win more appeals.  

Reporting Features That Keep You Informed: 

When you outsource the unemployment claims function, you need to stay well-informed about your program and how it’s working. You should expect the vendor to provide robust reporting that makes it easy for you to keep current on claims activity, including the number of claims won, lost, and pending. You’ll also want easy access to information about your quarterly and annual benefit charges, as well as reports that show how those figures are trending.   

A Fee Structure That Rewards Results: 

Many unemployment claims providers structure their contracts so that they’re paid based on the total volume of claims they handle. However, this fee structure provides no incentive for the vendor to reduce your claims costs, win more claims upfront, win more appeals, or drive down your UI tax rate. A performance-based fee is more advantageous, because it creates a strong incentive for the vendor to leverage proven strategies and best practices to achieve the optimal results. UC Alternative uses such a fee structure, encouraging us to take ownership of the process with the ultimate goal of achieving the lowest possible UI tax rate for your industry and state. 

Get a free unemployment claims projection and learn how we save employers up to 40% or more on their unemployment costs.