Unemployment Insurance (UI) Improper Payments
Introduction
The U.S. Department of Labor is implementing a number of strategies to help states address improper Unemployment Insurance (UI) payments. Reducing the improper payment rate will require strong federal-state collaboration and intense focus by the entire UI system. The Department has announced an immediate call to action to all states to ensure that payment integrity remain a top priority and to foster the development of state specific strategies to prevent improper payments.
A key strategy included in this plan is the convening of state cross-functional improper payment task forces. Designed to ensure that "everyone owns integrity" across the system and to promote innovative strategies, task forces are expected to continuously assess root causes and implement state-specific action plans to reduce improper payments while providing leadership nationally with other states to support reduction of improper UI payments.
The Department has partnered with eleven "High Impact" states to aggressively address improper payments. State task forces from these states participated in a virtual institute in June 2011 to develop comprehensive strategic plans and exchange best practices. All states completed a similar process in late September/early October 2011. In addition, the Department announced the award of approximately $192 million in supplemental budget funding to 42 states for projects related to program integrity and performance to address their root causes most likely to quickly reduce improper payments.
Each year, beginning in September 2011, the Department will identify the states with persistently high improper UI payment rates as "High Priority" and provide targeted and customized technical assistance to improve their performance. The Department will work closely with these states to identify the impediments, action steps, and technical assistance strategies to improve performance with a specific focus on prevention. High Priority states will be subject to additional monitoring and technical assistance until they achieve an improper payment rate under 10% and sustain that performance for at least six months.
Core Strategies to Reduce Improper Payments
The U.S. Department of Labor has identified nine core strategies which can be used by states to effectively lower their rate of improper Unemployment Insurance payments. Many states are already implementing these strategies, and the Department of Labor is working to highlight best practices, encourage states to replicate what works.
Cross-Functional Task Forces — These are cross-functional teams that include a combination of management, front-line workers, and state subject matter experts that will assess and address root causes of improper payments in individual states. The key objectives for these task forces is to have every state focus on the root causes of overpayments that have the highest impact in the state and use this process to inform strategic planning that will achieve immediate and meaningful reductions in the improper payment rate.
State Quality Service Plan (SQSP) / Strategic Plan Development — The SQSP is intended to be a dynamic document states use not only to ensure strong program performance, but also to guide key management decisions, such as where to focus resources. The SQSP should focus state efforts to ensure well-balanced performance across the range of UI activities. The SQSP also is designed to be flexible so as to accommodate, among other things, multi-year planning and significant changes in circumstances during the planning cycle. States can use this flexibility to incorporate the elements from the strategic plans developed by their Cross-Functional Task Forces into the SQSP to address improper payments.
National Directory of New Hires (NDNH) Recommended Operating Procedures (ROP) — For several years, the Department has encouraged states' use of the NDNH to reduce improper payments in the UI program. Directories of New Hires came about as a result of The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) and include state directories of new hires (SDNH) and a national directory of new hires (NDNH). These new hire directories, which were created for the purpose of child support enforcement, have allowed for improved access to wage data and data from other states regarding new hires and wages. Studies conducted about NDNH have concluded that the use of this tool results in earlier detection of improper payments, therefore increasing the likelihood of recovery. Detailed Recommended Operating Procedures (SOP) have been developed to provide states with information about best practices in conducting this match. Any states not already doing so will be required to begin conduct cross-matches using NDNH by December 2011 and all states are strongly encouraged to implement procedures in-line with the ROPs.
State Information Data Exchange System (SIDES) — SIDES is a web based system that allows electronic transmission of UI information requests from UI agencies to multi-state employers and/or Third Party Administrators, as well as transmission of replies containing the requested information back to the UI agencies. The current implementation of SIDES allows for the exchange of Separation and earnings verification information.
Claimant Messaging — Implementation of a statewide claimant messaging campaign designed to: 1) improve claimants' awareness of their responsibility to report any work and earnings if they are claiming benefits, and 2) improve claimants' understanding of work search requirements as a condition of eligibility for benefits. The state's campaign must consider how it may incorporate the Department's messaging products and tools.
Employer Messaging — Implementation of a statewide employer messaging campaign designed to improve employers' awareness of their responsibility to respond to state requests for separation information and/or earnings/wage verifications. The state's campaign must consider how it may incorporate the Department's messaging products and tools.
ES Registration — Implementing technology or other solutions designed to address improper payments due to a claimant's failure to register with the state's Employment Service or job bank in accordance with the state's UI law. These changes must be completed by April 30, 2012.
Implementation of Performance Measures — Strategies designed to help the state meet the proposed new performance measures which: 1) targets reducing BYE improper payments when claimants claim five weeks or more after returning to work by 30 percent the first year, and a total of 50 percent after two years; 2) targets a reduction of improper payment rates higher than 10 percent; and 3) establishes a recovery of overpayments target.
State-Specific Strategies — Implementation of state-specific solutions to prevent improper payments and reduce the state's improper payment rates in key root cause areas. States must identify the extent to which the strategy is expected tol reduce its improper payment rate, i.e. identify a reduction target. These acti
Learn more about the nine core strategies to reduce improper payments.
Track state plans and implementation.
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