Recently, the federal government reported that in the United States 11.4% of the unemployment benefits collected in 2012 were paid out in error. While this figure is down from 12% in 2011, this still amounts to $10.3 billion in improper payments received by claimants.

Often, in the unemployment industry we spend most of our time training and educating our clients on the importance of, and preparation to, properly respond to an unemployment claim. The goal is to avoid benefits from being granted to a claimant. This “front-end” need to respond timely, accurately and with complete information has not and will not diminish. At CCC we also need our partners to understand how important the “back-end” process of auditing unemployment charges is to a successful unemployment program.

With the recent focus and pressure from the federal governments, many state agencies are making policy and legislative changes to reduce the amount paid in improper payments. Most of these involve stopping the benefits from being paid up front. This includes putting pressure on employers to provide full and complete responses to initial claims. Illinois and North Carolina both recently implemented program changes that result in employers being chargeable for all benefits should they not respond timely. Only one state has taken the unique step of requiring claimants to provide accurate information, Arizona. They require that if a claimant files and does not provide accurate information to establish a claim, the claim will be deemed invalid.

While most of the steps being taken are to stop the improper benefits from being paid, the federal government is now taking steps to help states recoup the money that has been lost. The federal government is allowing states to report claimants that received improper payments to the IRS. The IRS will then hold any refund and send it to the appropriate state agency.

While it is only recently that the Department of Labor began to focus on controlling the amount of improper payments being received by claimants, those of us that have been in the industry for an extensive amount of time have always understood that the auditing process is integral to insuring that improper payments do not negatively affect our clients’ tax rates. There are several areas that our system and auditors review to insure a charge received from the state agency is valid. Frequently CCC does not require additional information from our clients to protest these payments. These include:

 

Unfortunately, there are instances when only the employer can identify that benefits should not be being paid. In most instances these are situations that should not even wait for a charge to arrive, but to be proactive, the state agency should be notified of the issue in advance of payment being made to the claimant. These include:

 

By partnering with our clients, CCC is able to communicate all instances that could result in improper payments to the state agencies and prevent those costs from affecting our clients’ tax rates. As well, because it can take state agencies several quarters to properly credit employer tax accounts, CCC follows up with these agencies on a quarterly basis to insure credits are received.

Having an effective “front-end” process of protesting unemployment claims timely, accurately and with complete information must exist with a “back-end” process of aggressive auditing and protesting of charges to insure that employer tax rates are not affected by large number of improper payments paid by state agencies. These complimentary processes are what insures a successful unemployment program. Should you need more information, please contact CCC at (800) 207-6926.


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