Case Study: Gaudenzia

Summary:
A review of Gaudenzia’s (GAU) Unemployment Program administered by UC Solutions Group (UCSG). They are a nonprofit drug and alcohol addiction treatment facility operating in PA, MD, and DE. Due to their 501c3 status and SUTA exemption, GAU elected to become a reimbursing employer at the beginning of 2013 and work with UCSG in lieu of paying the Unemployment Tax in all three states. UCSG covered all claim liabilities and adjudication for GAU in exchange for an annual premium. In this case study, we analyze the financial impact realized by GAU: a savings of 31.48% compared to what they would have owed as a taxpaying employer.

Analysis:
To assess UCSG’s performance, we compared the total premium due each fiscal year to the total estimated tax contribution that would have been due to PA, MD, and DE. Each state’s DOL calculates UC tax assessments differently and assigns a rate based on prior experience. These rates are multiplied to the reported taxable payroll and expensed each quarter.

Results:
Over a five-year period, GAU would have owed PA, MD, and DE $2,535,878 in payroll taxes. During this same period, UCSG received $1,737,589 in premium, which equates to a savings of $798,289 (31.48%). Active management of claims has played a significant role in reducing overall costs. UCSG’s third-party claim administrator, PeopleSystems, processes on average 322 claims annually; which helped reduce total unemployment claim liability by $6,657,104 while also crediting $480,117 in claim overpayments.

REDUCING COSTS AND LIMITING EXPOSURE OF UNEMPLOYMENT CLAIMS