Charge Auditing: Prevent Improper UC Benefits Payments
While the prevention of improper unemployment benefits via compliant claims response remains the primary focus of UI integrity legislation, the rapid identification of these charges (after they begin) can also go a long way toward reducing the $5 billion in overpayments.
Improper charges can have a direct effect on your company’s unemployment experience, potentially causing significant increases in unemployment tax rates (for merit rated organizations) or quarterly unemployment billings (for reimbursing organizations) and resulting in thousands of dollars in unnecessary unemployment costs.
For example, if an erroneous charge were to cause an employer’s tax rate to jump just one or two tax brackets, it could result in a 5-10% increase in total unemployment taxes. And for those employers who fund the state on a dollar-for-dollar reimbursement basis, improper charges could result in an increased unemployment cost of $317 per week, or over $5,000 over the life of a claim (based on national averages).
To minimize these improper charges, and the resulting impact on your unemployment cost, charge auditing is critical so employers can validate everything charged to their unemployment account. Charges levied against your organization by the state may warrant a protest for a variety of reasons including:
- Charges assessed without a corresponding claim
- Charges assessed despite a state determination of ineligibility
- No response (determination or appeal) from the state
- Delayed relief of charges after a successfully appealed or overturned eligibility decision
- Charges assessed for individuals who never worked for your organization
- Charges to the wrong state unemployment insurance account (this often occurs after reorganizations, mergers/acquisitions, etc.)
In addition, employers should also identify and eliminate any charges associated with a claimant who receives both unemployment benefits and wages (either from your organization or a subsequent employer) in the same week. This can be accomplished by cross matching all charges against active employment and wage data available either through state or private databases.
Despite best efforts for accuracy, mistakes can be made. This is why charge auditing is critical. Click here to view data on improper payment rates by state.
In some cases, charge auditing for UC providers can be done on a retro-active basis, offering employers an opportunity to gain immediate relief from improper benefits previously charged to your organization. For more information about effective charge audit strategies, contact Pete Krieshok at (314) 214-7325 or via email at pete.krieshok@Equifax.com.
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