Frequently Asked Questions
About Unemployment Claims Management

When you outsource unemployment claims management, the vendor becomes your partner and takes ownership of this function as an extension of your team. A best-in-class vendor identifies the true cost of your unemployment claims, then develops a strategy for winning more claims upfront and on appeal, which reduces your unemployment insurance (UI) tax rate.

The vendor helps you craft a winning case by reviewing your claim notice response for completeness and accuracy, ensures your documentation is sufficient, and submits responses through the State Information Data Exchange System (SIDES). A world-class vendor also works proactively on your behalf to keep current on unemployment regulations in the states you operate in, tracks outstanding claims, ensures timely responses to avoid penalties, and provides consultative services to reduce your claims-related costs.

Two trends are encouraging employers to outsource unemployment claims management:

• Rising costs for labor, materials/supplies, insurance, and technology create a strong incentive to reduce unemployment claims costs, including UI taxes.

• As a strategic partner to the leadership team, HR functions have their hands full recruiting and retaining top talent, onboarding and training employees, developing succession plans, navigating the hybrid work environment, supporting employee wellness, and integrating AI into their operations. Outsourcing unemployment claims management frees their time to focus on these strategic priorities instead of transactional work.

The following are four common signs that outsourcing this function would greatly benefit your business:

• Your claims are increasing because your employee base is rising (whether organically or through M&A) and the volume has become too difficult to handle in-house.

• Your HR team doesn’t have the availability or capacity to manage unemployment claims effectively. Perhaps the team is lean due to attrition or their workload is filled with other initiatives that take priority.

• Your HR team is spending too much time on low-value but necessary claims transactions, distracting them from strategic, high-value work—like attracting, retaining, and engaging the workforce you need to succeed.

• You’ve paid penalties for compliance issues, such as failing to file timely claim responses or running afoul of the Unemployment Insurance Integrity Act by filing an insufficient response.

Every organization’s experience is unique, but on average the employers that outsource unemployment claims management to UC Alternative save 40% or more on unemployment claims-related costs. These savings result from winning more claims upfront and on appeal and reducing the business’s UI tax rate, ideally below the industry average in the states where you do business.

For example, an employer with 9,000 employees saved $4.2 million by driving down their UI tax rate from 1.7% to 0.5% over a three-year period, as a result of working with UC Alternative. An organization with 4,100 employees saved $900,000 over a four-year period by reducing its unemployment claim costs through our outsourced claims management services.

Choosing a vendor that takes ownership for the necessary, yet labor-intensive and transactional task of managing unemployment claims frees your staff from the time-consuming administrative burden. For example, by receiving claims directly from the state, the unemployment claims management provider eliminates an administrative task for your staff, while prompting faster follow-up. In turn, you and your team will have more time and bandwidth to focus on strategic, high-value tasks.

Outsourcing claims management also helps you avoid the costs of adding staff to handle this function even as your organization grows—and provides the constant oversight necessary to stay compliant with ever-changing, state-specific unemployment laws and regulations.

Most HR teams are stretched thin by competing priorities, including the challenges of attracting and retaining talent in a tight labor market, keeping the workforce engaged even when working remotely, integrating AI into HR practices, and maintaining a healthy culture. Outsourcing unemployment claims management allows your HR team to focus on these strategic and valuable initiatives on behalf of your current workforce, as opposed to spending time transacting claims on behalf of your former employees.

First we conduct an analysis of your current and historical unemployment insurance (UI) tax rates and compare them to the lowest rates for your industry in the states where you operate. Then we use that data to establish multi-year objectives for lowering your UI tax rate, with the ultimate goal of reducing it below the industry average—and ideally to the lowest possible rate in each state where you do business. These goals become the yardstick for measuring our success.

That’s a common misconception. The truth is there is a very controllable portion of your UI tax rate: your experience rating. Though every state varies, typically your organization’s experience rating is based on:

• Unemployment claims filed against your company (both the number and claims amount)

• Your taxable payroll

• Your UI taxes paid

• Total benefits charged to your UI account

By helping you win more claims upfront and on appeal, we drive down your UI tax rate over time and directly impact three of these factors (all but your taxable payroll).

You should measure the success of your program based on the business outcome the vendor delivers—not the number of transactions they process. A best-in-class vendor will quantify the cost savings directly attributable to your outsourced program, through metrics such as the number of claims won upfront, the number of claims won on appeal, and the reduction in your unemployment (UI) tax rate over time, which collectively saves your company considerably on taxes. An experienced vendor will help your organization achieve the lowest possible UI tax rate, ideally below the average for your industry in the states where you employ workers.

Your vendor should provide access to data dashboards that make it easy to track claims activity and the savings realized from your program, at the organizational level and by location.

For example, UC Alternative provides dashboards that illustrate how your UI tax rate is trending, how it compares to industry averages, and the savings generated by reducing this rate. Our reports also show your quarterly benefit charges, annual benefit charge trends, the number of claims won/pending/lost, and your hearing win rate. In addition to providing on-demand access to these dashboards, on a monthly and quarterly basis we provide at-a-glance reports that provide a wealth of information about your program.

Filing claim appeals and attending hearings will cost your organization considerable time and money. That’s why UC Alternative takes a proactive approach to managing unemployment claims—helping you avoid these costs and time drains by winning more claims upfront and on appeal. Your dedicated UC Alternative representative reviews lost claims, recommends whether to file an appeal, then helps you file it timely.

If the appeal does go to a hearing, we diligently prepare your witnesses to testify and offer guidance that puts them at ease. For example, we develop a Case Summary that outlines the key hearing issues, any relevant background, the documents to be presented at the hearing, key points for each witness’s testimony, and the hearing procedure that will be followed.

UC Alternative is the only provider that uses a performance-based pricing model which directly ties our compensation to the business outcomes we deliver. The more claims we help you win, and the more we reduce your unemployment insurance (UI) tax rate, the greater your savings and the higher our compensation. Our performance-based pricing model demonstrates just how confident we are in our ability to deliver exceptional outcomes.

In contrast, most vendors use a volume-based pricing model, charging a flat fee per claim processed. This approach compensates the vendor just for completing transactions. Their fees are based on the number of claims they handle, regardless of the outcome. These vendors also tend to charge a minimum fee, regardless of your total claims volume.

A performance-based pricing model ensures your organization pays for business results, not transactional activity. It naturally motivates the vendor to win more claims and reduce your UI tax rate to the lowest possible by taking a strategic, proactive approach to claims management and viewing every claim as a winnable opportunity. This model shifts accountability for achieving better unemployment claims outcomes to the vendor and transfers some of the risk to their organization, since their revenue is at risk if they don’t deliver long-term, sustainable results.

But perhaps the greatest advantage of a performance-based pricing model is that it generates better outcomes and higher savings by reducing claims-related costs up to 40% or more. When you win, we win.

This pricing approach gives the vendor a strong financial incentive to take ownership of unemployment claims management and deliver better results, as measured by more claims won and a lower unemployment insurance (UI) tax rate. Performance-based pricing also shifts the vendor’s mindset: When a vendor is compensated for results, they view every claim as potentially winnable. With more skin in the game, they’re highly motivated to apply proven strategies and best practices to optimize your program outcomes.

Through our research and discussions with leading companies, we know most look for a partner that specializes in unemployment claims management, as opposed to a company that provides a wide variety of services. The vendor should have deep knowledge of unemployment laws and regulations and stay abreast of any changes, along with extensive experience managing claims and a long history of generating significant cost savings. They should take full ownership and provide complete oversight of the claims management function, offloading the burden of compliance and administrative work from your internal team.

You should also assess the vendor’s commitment to client service, ensuring it’s always responsive and delivered by highly qualified support staff. And ask if they provide easy-to-use, transparent reporting that enables you to monitor your program and keep track of your savings.

Finally, look for evidence that you’re talking with a qualified, reputable vendor. For example, the UC Alternative leadership team has 30+ years of experience helping leading organizations reduce their unemployment-related costs.

If you choose UC Alternative as your claims management partner, you’ll find it fast and easy to get started with our service. An implementation expert will start your program quickly and with minimal effort on your team’s part, by leveraging our 30+ years of experience and deep knowledge of payroll and HRIS applications.

Soon after you sign an agreement we conduct a kickoff meeting to discuss what we need, such as the type of employee data and the powers of attorney (POAs) for each state in which you employ workers. By week two, we aim to have all POAs signed and submitted to the corresponding states. Concurrently, your team prepares the data files we need to manage your claims. While payroll files are ideal, we can get your program underway using employee records if needed. Assuming there are no hold-ups with receiving the necessary files, we can get your company onboarded and begin receiving your unemployment claims within a few weeks of signing the agreement. The exact timeline can vary based on the size and complexity of your organization.

Partnering with UC Alternative means gaining a dedicated team that takes ownership of your unemployment claims management. There are a few key responsibilities your organization will need to fulfill to ensure a smooth and effective process:

• Provide payroll data on a consistent and timely basis, aligned with your pay periods, so we can accurately track claims and manage your UI tax rate

• Respond to separation information requests promptly, ensuring we have the details needed to build a strong case and minimize claim losses

• Share any supporting documentation required to defend claims, such as termination records and policy acknowledgments

• Participate in hearings when necessary, with our team guiding you through preparation to maximize success

• Direct all verification requests to our website, streamlining employment and wage verifications for efficiency and compliance

By meeting these responsibilities, your organization enables us to proactively manage claims, reduce costs, and drive down your UI tax rate—while relieving your internal team of administrative burdens. Our process is designed to be seamless and efficient, ensuring minimal effort on your part while delivering maximum results.

If you choose UC Alternative as your claims management vendor, you can be confident in the security of your data. We store data on private servers in commercial Tier 4 data centers, encrypting it at rest and in transit, and conduct regularly scheduled vulnerability tests and penetration tests of our systems. The data centers meet stringent industry standards including ISO/IEC 27001; SOC 2 and 3; PCI DSS Level 1; and NIST 800-53. 

UC Alternative is committed to providing the fast, accurate service and support your business deserves. You’ll work directly with a knowledgeable representative assigned to your account—an experienced professional who is deeply committed to your success and dedicated to providing exceptional service.

UC Alternative offers pre-termination consultation to your local teams to help them follow procedures that mitigate unemployment claims issues. While we don’t provide legal advice, we can advise you on whether the incident you intend to discharge an employee for will be considered valid based on the unemployment laws in your state and your policies. We can also review documentation to determine if it is sufficient to support your case and help your teams avoid missteps in the course of a discharge that could jeopardize an unemployment case. These measures help you win more claims upfront and on appeal, reducing your UI tax rate and claims costs.

If you employ staff in multiple states or plan to expand your operation geographically, it’s vital to work with a vendor that can support your company now and as it grows. UC Alternative works with multi-state employers across the US, so we understand the nuances and complexities of unemployment laws and regulations that vary by state. No matter where you do business today or plan to operate tomorrow, UC Alternative has the expertise to support your business.

UC Alternative has over three decades of experience helping leading organizations reduce their unemployment-related costs by winning more claims and driving down their UI tax rate. We don’t just process claims; we take a proactive, strategic approach that captures more opportunities to reduce your unemployment-related costs and relieves your HR staff of administrative burdens. Our team applies deep knowledge of unemployment laws and regulations and extensive experience managing these claims to achieve exceptional outcomes.

UC Alternative’s unique, industry-first performance-based fee model ensures we’re rewarded for claim outcomes—not claim volume—giving us a strong incentive to optimize your savings by achieving the lowest possible UI tax rate for your industry in the states where you employ workers. We serve as your trusted partner, deeply committed to your success and dedicated to maximizing your savings through our proven processes, advanced technology, and superior service. Leading organizations tell us our strategic approach and long track record of success give them confidence to outsource their unemployment claims management to UC Alternative.

Yes. We offer employment tax incentive services that help your business capture every hiring tax credit and incentive you qualify for at the federal, state, and local levels. We can help your organization leverage a wide range of hiring tax credits and incentives, including the Work Opportunity Tax Credit (WOTC), Empowerment Zone Credit, Indian Employment Credit, and state and location-based credits.

UC Alternative also offers employment and wage verification services that free your staff from the never-ending burden of responding to these distracting requests while delivering accurate, timely information.