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Unemployment Insurance. The conference will begin shortly. To hear the audio portion of this presentation, please dial: 1-866-740-1260 Passcode 2792966. A Webinar Exclusively for Arizona Nonprofit Organizations. In partnership with:. First Nonprofit Group. An AmTrust Financial Company

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Unemployment insurance

Unemployment Insurance

The conference will begin shortly. To hear the audio portion of this presentation, please dial:

1-866-740-1260 Passcode 2792966

A Webinar Exclusively for Arizona Nonprofit Organizations

In partnership with:


First nonprofit group
First Nonprofit Group

  • An AmTrust Financial Company

  • Based in Chicago, Illinois

  • Our State Unemployment Insurance (SUI) programs serve more than 1,600 nonprofits across the country, covering in excess of 300,000 employees.



Financing options available for sui
Financing Options Available for SUI

  • Two ways to satisfy SUI obligation

    • Through the state tax fund (2014)

      • Pay assigned rate on the first $7,000 per employee

        • Minimum Rate = 0.03%, Maximum Rate 7.17%

        • From $2.10 to $501.90

        • Paid on quarterly basis

    • Become a “Reimbursing” employer – Two options

      • Self-insure one’s unemployment benefits

        • State issues a bill to the employer at the end of each quarter for claims paid to former employees

      • Risk pool, trust, or insure through 3rd Party


Pros and cons of the sui tax fund
Pros and Cons of the SUI Tax Fund

  • Advantages

    • Fixed annual cost

    • No risk beyond assigned tax rate

  • Disadvantages

    • The solvency level of fund sets rates

    • Socialized costs

    • Costs can increase even if experience improves

    • Added strain on cash flow as a majority of tax liability paid by mid-year


What is reimbursing
What is Reimbursing?

  • Organization is financially responsible for reimbursing the state dollar-for-dollar on former employees’ unemployment claims.

  • Advantage

    • Lower cost

  • Disadvantages

    • No limit to aggregate annual costs (self-insured or 3rd party plan without cap)

      • Max individual claim = $6,240 ($240 per week x 26 weeks)

    • Inability to accurately budget for cost (self-insured)

    • Exposure to severe fluctuation in costs (self-insured)

    • Loss of certain protest rights (all reimbursing employers)

    • Must track credits due (all reimbursing employers)


Forward thinking getting prepared to address the rising costs of unemployment insurance

Forward Thinking: Getting Prepared to Address the Rising Costs of Unemployment Insurance


A quick look at arizona s unemployment
A Quick Look at Arizona’s Unemployment

UNEMPLOYMENT

(number of unemployed)

June 2011 Unemployment: 290,407 (9.5%)

June 2012 Unemployment: 253,777 (8.4%)

June 2013 Unemployment: 243,443 (8.1%)

June 2014 Unemployment: 210,367 (6.9%)

Dec. 2010 Trust Fund Balance: -$236 Million

Dec. 2011 Trust Fund Balance: -$361 Million

Dec. 2012 Trust Fund Balance: -$312 Million

Dec. 2013 Trust Fund Balance: $26 Million


Sui fund average cost per employee
SUI Fund – Average Cost Per Employee

  • Arizona

    • 2009: $ 93

    • 2010: $140

    • 2011: $155

    • 2012: $165

    • 2013: $165

    • Target: $244


Path to solvency
Path to Solvency

  • U.S. Department of Labor (Passed)

    • Solvency standards to qualify for Title XII, effective 1/1/14

      • Current balance of Arizona UI Trust Fund = $4,568,726

      • Balance required to meet initial standards = $85,051,866

        • Ineligible for Interest Free Reinsurance Program

  • State of Arizona HB 2173 (Passed)

    • Authorization to issue $200M in bonds to repay Federal Loan

  • Administration’s proposal

    • Increase Federal UI Taxable Wage Base to $15,000 in 2017

      • Currently $7,000

      • SUI Taxable Wage Base must meet federal minimum

    • Index Federal UI Taxable Wage to average annual wage

      • If indexed today, UI Taxable Wage base would be $16,600


Unemployment products

Unemployment Products

Meeting the Needs of Nonprofits


Unemployment products1
Unemployment Products

  • Bonded Service Program

  • Unemployment Savings Program

    Must currently have reimbursing employers status or convert to reimbursing status to participate!


Bonded service program features
Bonded Service Program Features

  • Fully insured program

    • First and last dollar coverage

    • Premium set at % of gross wages

  • Fixed annual cost

    • Precise allocation to fund source

  • Budgetary certainty

  • Potential Experience Credit/Refund

  • Maximizes cash flow

    • Billed in equal quarterly installments

  • Claims administration service

    • On-site education and training

    • Benefit charge auditing

    • Comprehensive claims counseling

    • Hearing representation


Unemployment savings program features
Unemployment Savings Program Features

  • Proprietary reserve account

    • Only responsible for organization’s own claims (no pooled/shared risk)

    • Fixed annual deposit (the insured owns the balance)

  • Stop loss insurance

    • Protects organization from unforeseen layoffs or excess loss

  • Interest bearing reserve

    • Average investment return = 4.14% (2004-2013)

    • 2013 = 5.60% return

  • Administrative costs

    • Covers stop loss insurance, management fee, commission and claims administration

  • Maximizes cash flow

    • Billed in equal quarterly installments

  • Claims administration services

    • Handles all correspondence with state on member’s behalf

    • Benefit charge auditing

    • Claims counseling and hearing representation


Unemployment claims service includes
Unemployment Claims Service Includes:

  • Audit of Benefit Charges

    • Benefit awards, claims duration, and liability for accuracy

    • Ensure credits are received

    • Audit charges to wages paid to detect fraud

  • Claims

    • Process all separation data and unemployment claims

    • Review, prepare arguments, and protest decisions as needed

    • Attend all unemployment hearings

  • Technical services

    • Review personnel policies and procedures (all hiring and separation)

    • Provide educational workshops for management and supervisors

    • Customized claims activity reports

      • Online access

    • Individual claim status reports


The claims process
The Claims Process

Claim filed at local unemployment insurance office by employee

Claim notice generated to the employer

Reconsideration by adjudicator or hearing scheduled

Verbal and written communication with the local office adjudicator

APPEAL FILED

Unemployment hearing at which testimony is presented on the issued appealed

Board evaluates hearing transcript

APPEAL FILED

Decision(s) issued to both parties by the local office adjudicator on relevant issues

Decision issued – end of administrative process

Decision sent by mail to both parties

CLAIMS PROCESS ENDS

CLAIMS PROCESS ENDS*

CLAIMS PROCESS ENDS

* Further appeal to circuit court and higher can be initiated by the claimant or employer’s legal counsel.All claims may not go this far in the process. Our procedure is to advise the employer if the further appeal is not warranted on questionable loss decisions.

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Case study
Case Study

  • Since 2005, a First Nonprofit Group member providing child care and educational services has saved over $100,000 on it’s unemployment insurance costs.

  •  What does a $100,000 savings translate into? More money for your cause!

SUTA

First Nonprofit Group


Savings
Savings

  • 2014 members saved an average of $41,473 on their unemployment costs

  • Through our partnership with the Alliance of Arizona Nonprofits, our Arizona members have saved over $1 million!



How to receive a quote arizona
How to Receive a Quote?Arizona

All employers:

  • Complete application form (two pages)

  • Four most recent State Quarterly Wage Filing (UC-018) forms – Summary page only

    Taxpaying employers:

  • 2012, 2013, and 2014 “Determination of Unemployment Tax Rate” forms

  • 7/1/11 – 6/30/14 “Benefit Charge Notice” forms

    Reimbursing employers:

  • 12 Most recent “Benefit Charge Notice” forms

    Fax all info to 312-239-8368.





State requirements to convert from the state tax fund to reimbursing
State Requirements to Convert from the State Tax Fund to Reimbursing

  • 501(c)3 IRS certificate

  • Letter of intent

  • Timing

    • All paperwork must be submitted before November 30th

    • Conversion effective January 1, 2015


Thank you

Thank You! Reimbursing

Beth Quynh

Regional Sales Director

First Nonprofit Group

An AmTrust Financial Company

www.firstnonprofitgroup.com

Phone: 214-360-2477

[email protected]


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