Unemployment Insurance (UI)

An Official Website of the United States Government

Tuesday, May 31, 2011

Department of Labor

The Federal-State Unemployment Insurance program helps cushion the impact of economic downturns and brings economic stability to communities, states, and the nation by providing temporary income support for laid off workers. The program provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined under state law), and who meet other eligibility requirements of state law.

Each state administers a separate unemployment insurance program within guidelines established by federal law.
Eligibility for unemployment insurance, benefit amounts, and the length of time benefits are available are determined by the state law under which unemployment insurance claims are established.

Agency Accountable Official: James L. Taylor, Chief Financial Officer

Program Accountable Official: Jane Oates, Assistant Secretary for Employment and Training

Measures

Current

$156.0B

Total Payments (Outlays)more info

$17.5B

Improper Paymentsmore info

11.2%

Improper Payment Ratemore info

2011

9.8% Improper Payment Rate Target more info

All amounts are in billions of dollars

Projections Historical

Fiscal Reporting Year

Rate

2010

11.2%

2011

9.8%

2012

9.7%

2013

9.6%

Tabular view for Projected improper payments Tabular View

Program Comments

The Department of Labor estimates Unemployment Insurance (UI) program integrity rates through the Benefit Accuracy Measurement (BAM) program, which is a statistical survey of paid and denied unemployment insurance claims. States conduct comprehensive audits of a sample of claims to verify claimant eligibility and determine the accuracy of decisions to pay or deny benefits. The 2010 improper payment rate of 11.2% for the program exceeded the target of 9.9%. The estimated overpayment rate was 10.6%, and the estimated underpayment rate was 0.6%. The 2010 overpayment rate of 10.6% represented an increase from the 2009 rate of 9.6%, largely attributable to an increase in overpayments to claimants who did not meet their active work search requirements. Claimants who continued to claim UI benefits after they returned to work and claimants who were ineligible for benefits because they voluntarily quit their jobs or were discharged for misconduct also contributed to the increase. An estimated 2.4% of UI benefits were overpaid due to fraud in 2010. Overpayments due to fraud are included as part of both the Annual Report and Operational overpayment rates. Read More...

Many errors in the UI program are due to eligibility errors that can be prevented or detected early through state use of third-party verification resources, such as matching claimant records with new hire and Social Security data. The leading cause of overpayments is claimants who have returned to work and continue to claim UI benefits. Early detection of these overpayments -- which represented 27 percent of all overpayments in the 2010 reporting period -- allows agencies to stop payments sooner and to recover these overpayments more readily. Matching the Social Security Numbers of UI claimants with the National Directory of New Hires (NDNH) and State Directory of New Hires (SDNH) databases is the most effective tool in identifying these improper payments. For the period July 2009 to June 2010, state Benefit Payment Control operations reported using new hire matching to detect and establish for recovery $155 million in overpayments. During the same period, BAM identified an estimated $319 million in overpayments through matching with the NDNH or SDNH.

The second largest cause of overpayments is errors in handling separation issues, which represented 20 percent of all overpayments in the 2010 reporting period. To reduce improper payments due to separation issues, the Department of Labor is working with the state agencies to facilitate their participation in the State Information Data Exchange System (SIDES) -- an automated employer response system to standardize the collection of information on employee separations from employers and third-party administrators (TPAs) to improve the accuracy of claimant eligibility determinations. The Department of Labor is planning a phased implementation of state participation in SIDES. The development and testing of SIDES is complete, and SIDES became operational in February 2010. Currently, Utah and a third party administrator (TPA), Automated Data Processing, Inc., are participating in this initiative.

The Department of Labor continues outreach activities to promote the use of SIDES and provide technical assistance for SIDES implementation to the states. The Employment and Training Administration, in conjunction with the National Association of State Workforce Agencies (NASWA) and the Information Technology Support Center (ITSC), conducted a training session in June 2010. Participants from 12 states and 4 TPAs (AZ, CT, IA, KS, MD, MI, MS, NC, NY, RI, TX, UT, VA, Barnette Associates, Paychex, UCTA, and Corporate Cost Control) attended the training session.

Most of the improper UI payments not caused by benefit year earnings or separation errors are due to the claimant not meeting one or more of the continued eligibility requirements, such as conducting an active work search, registering with the state employment service, and being able and available for work. In fiscal year (FY) 2005, the Department of Labor began providing states funds to conduct Reemployment and Eligibility Assessments (REAs) with UI beneficiaries to reduce improper payments both by speeding claimants' return to work and by detecting and preventing eligibility violations. During FY 2010, the Department provided $50 million in funding to support REA activities in 33 states and the District of Columbia. A total of 40 states have received funding to implement REA programs.

Additional information on the program is also provided in the Department's annual Agency Financial Report.

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