How Performance-Based Pricing is Transforming Unemployment Claims Management
Many companies view the cost of unemployment claims and unemployment insurance (UI) taxes as unavoidable costs of doing business. But while you certainly can’t avoid these expenses entirely, you can reduce them with proper claims management. And as some organizations have discovered, when your claims management fees are based on the vendor’s performance, the savings can increase exponentially, creating an unanticipated profit center.
Changing the Mindset About Unemployment Costs
In many organizations, handling unemployment claims is primarily a transactional function. At a time when hiring and retaining skilled workers is incredibly challenging, many companies struggle to devote the time just to keep up to date on claim notices and file timely responses. That’s especially true when the person who handles unemployment claims has many other responsibilities, including critical HR tasks like building and engaging with a productive, satisfied workforce. There simply may not be an internal champion with the bandwidth to focus on improving the unemployment claims win rate or driving down the UI tax rate.
At the same time, most unemployment claims management vendors charge a per-claim fee for their services. As a result, organizations pay for claims activity, with no correlation to the results achieved. When a vendor only reports on their claims volume handled, it depicts the unemployment claim as just another transaction to check off the list—not an opportunity to reduce costs.
The notion that a company can take strategic, proactive steps to win more claims and improve their experience rating—in turn, reducing their UI tax rate and total UI taxes paid—runs counter to how most organizations approach these claims and how most vendors charge for the service. But adopting an entirely different view of unemployment claims empowers organizations to drive significant savings to the bottom line.
Performance-Based Fees Incentivize Better Outcomes
Thinking about unemployment claims differently starts with understanding that at least a portion of the UI tax rate is controllable. In UC Alternative’s experience, organizations that file more complete and compelling responses to claim notices win more claims upfront, and those that respond more thoughtfully to appeals and prepare more diligently for hearings win more claims on appeal. Both measures improve the company’s experience rating, which reduces the UI tax rate. In fact, we’ve seen some organizations reduce their rate to below the industry average in their state, outperforming their peers.
While this approach is proven to yield substantial savings, many organizations don’t have the bandwidth to take on all the work it requires. And if they turn claims management over to a third party that charges based on volume, there is no real incentive to improve the rate of claims won. Win or lose, every claim handled is worth the same amount of revenue to the vendor.
Performance-based pricing turns this dynamic on its head by creating a strong incentive for the unemployment claims management vendor to improve claims outcomes. Vendors like UC Alternative charge a fee that’s tied to their performance, specifically when it comes to reducing the UI tax rate over time. It’s a more strategic view of how unemployment claims impact the organization’s bottom line and a longer-term approach designed to yield sustainable results.
When the vendor’s revenue is tied to the results of the client’s claims management program, there is greater motivation to take every measure feasible to win more claims and reduce the UI tax rate. At UC Alternative, those measures include:
- Asking extensive questions about how your claims management process works, to identify gaps and missed opportunities
- Employing out-of-the-box thinking to develop effective strategies for improving claims management
- Setting annual goals for your UI tax rate, tracking how it’s trending, and comparing your rate to those of peer companies
- Instilling a proactive, strategic process for your internal team to follow
- Reviewing claims notices for completeness and accuracy
- Crafting a claim response that presents a strong case and increases the odds of winning it upfront
- Approaching every claim as a winnable opportunity (which might result in a lower documented win rate vs vendors that don’t actively protest claims – but in reality, results in better outcomes and greater savings)
- Identifying fraudulent claims and securing reversals
- Offering to consult with your staff before they discharge an employee to ensure they follow proper procedures
- Preparing your staff thoroughly for appeal hearings
- Assigning a single point of contact who builds relationships with your team and offers personalized, responsive service
- Receiving claims directly from the state, allowing us to ask for extensions directly or as needed
For tips on what to expect from an unemployment claims management vendor, download our informative guide: What to Consider When Choosing an Unemployment Claims Provider.
Leading Organizations Pay for Performance with UC Alternative
World-class unemployment claims management isn’t about handling transaction volume; it’s about effecting transformational change that drives better outcomes. Leading organizations recognize the difference and partner with UC Alternative to win more claims, reduce their UI tax rate, and generate substantial savings.
UC Alternative’s unique, industry-first performance-based fee structure creates a powerful incentive for our team to achieve the best unemployment claims results. With decades of unemployment claims experience and deep expertise in the industries we serve, our staff has the skills and passion to help your company win more claims upfront, win more appeals, and pay less UI tax by driving down the experience rating portion of your UI tax rate. Many of our clients pay a UI tax rate that’s lower than the industry average for their state!
UC Alternative takes ownership of the unemployment claims function, removing the burden from your internal team’s shoulders and ensuring a focused effort on improving claims outcomes. As your true partner, we combine a proven process, advanced technology, and exceptional service to capture more opportunities to reduce your UI tax rate and your total claim costs.
Get a free unemployment claims projection and learn how we save employers up to 40% or more on their unemployment costs.
