Publication of 2004 UI benefit accuracy data

Employment and Training Administration, Advisory System
U.S. Department of Labor
Washington, D.C. 20210
Classification: UI
Correspondence symbol: OWS/DPM
Date: August 31, 2005
Rescissions: None
Expiration date: August 31, 2006

ADVISORY: UNEMPLOYMENT INSURANCE PROGRAM LETTER No. 31-05

TO: STATE WORKFORCE AGENCIES

FROM: CHERYL ATKINSON s/s
Administrator
Office of Workforce Security

SUBJECT: Publication of Unemployment Insurance (UI) Benefit Accuracy Measurement (BAM) Data for Calendar Year (CY) 2004

1. Purpose. To notify State Workforce Agencies of the publication of CY 2004 UI BAM paid
   and denied claims data and to provide an Executive Summary of the data.

2. Reference. Unemployment Insurance Program Letter (UIPL) No. 17-05.

3. Federal Publication of BAM Data. The Department of Labor (DOL) has published the CY
   2004 BAM analytical report on the Employment and Training Administration’s Web site: http://workforcesecurity.doleta.gov/unemploy/bam/2004/bam-cy2004.asp.

   This analytical report includes detailed cause, responsibility, and prior agency action data for
   four overpayment rates:

    a. Operational Rate -The operational overpayment rate includes overpayments that the
       states are reasonably expected to detect and establish for recovery through their usual
       operating procedures. The operational rate is a component of DOL’s overpayment
       detection measure under the Government Performance and Results Act and a Core
       Measure of states’ performance under UI Performs, the performance measurement
       system for UI.
   
    b. Annual Report Rate - The Annual Report rate includes fraud, nonfraud recoverable
       overpayments, nonfraud nonrecoverable overpayments, official action taken to reduce
       future benefits, and payments that are technically proper due to finality or other rules.
       All causes and responsible parties are included in this rate.
   

c. Agency Error Rate - This rate includes overpayments for which the state agency was either solely responsible or shared responsibility with claimants, employers, or third parties, such as labor unions or private employment referral agencies. The rate includes fraud, nonfraud recoverable overpayments, nonfraud nonrecoverable overpayments, official action taken to reduce future benefits, and payments that are technically proper due to finality or other rules.
d. Fraud Rate - The definition of unemployment compensation fraud is determined by each state and varies from state to state. The rate includes all causes and all responsible parties.

In addition to data on overpayments, the analytical report includes detailed cause, responsibility, and prior agency action data for improper monetary, separation, and nonseparation denials. Data on overpayment rates by initial and continued claim filing method, paid and denied claims error rates per UI workload measures, and a list of state contacts for public inquiries about the BAM data are also included in the report. The attached Executive Summary includes paid and denied claims accuracy rates for CY 2003 and CY 2004; paid claims cause and responsibility data for CY 2000 to CY 2004; and BAM accuracy rate definitions.

Although states are no longer required to publish BAM data, states may choose to release their BAM data to the public independent of the Federal release.

4. Action. State Administrators are requested to provide copies of this information to the
   appropriate staff.

5. Inquiries. Questions should be directed to the appropriate regional office.

6. Attachment. Executive Summary: Calendar Year (CY) 2004 Benefit Accuracy Measurement
   Data.

Attachment

Executive Summary:
Calendar Year (CY) 2004 Benefit Accuracy Measurement Data

Paid Claims Accuracy

                                               CY 2004           CY 2003         Change

CY 2003 - CY 2004
Amount of UI Benefits Paid $34.44 B $40.97 B - $6.53 B
Overpayments:
Operational % 5.28% 4.98% + 0.30 Operational $ $1.82 B $2.04 B - $0.22 B Annual Report % 9.92% 9.31% + 0.61 Annual Report $ $3.42 B $3.81 B - $0.39 B Underpayment % 0.67% 0.63% + 0.04
Underpayment $ $230.1 M $257.1 M - $27.0 M

Overpayment Cause Trends -- Operational Overpayments

UI benefits paid to individuals who are working account for over half of the operational overpayments. This type of overpayment increased from 2.16 percent of UI benefits paid in CY 2003 to 2.72 percent of UI benefits paid in CY 2004. Issues related to separation from employment, the second leading cause of operational overpayments, decreased slightly in CY 2004. In each of the years 2000 to 2004, less than one percent of UI benefits paid were overpaid due to able and available (A & A) and other eligibility issues.

Leading Causes of Operational Overpayments

3.0%
Pct. of UI Benefits OP

2.5%

2.0%
BY Earnings
Separation Iss.
1.5%
A&A
1.0%
Other Elig. Issues

0.5%

0.0%
2000 2001 2002 2003 2004

Overpayment Cause Trends -- Annual Report Rate

As with the operational rate, benefits paid to individuals who are working account for the largest proportion of overpayments, and separation from employment issues have been the second leading cause of overpayments in recent years. Work search issues, the third largest cause of overpayments, increased for the third consecutive year. Employment Service registration issues, the fourth leading cause, was essentially unchanged from the previous year.

Leading Causes of UI Overpayments

3.0%
Pct. of UI Benefits OP

2.5%

2.0%
BY Earnings
Separation Iss.
1.5%
Work Search
1.0%
ES Registration

0.5%

0.0%
2000 2001 2002 2003 2004

Overpayment Responsibility Trends

The following two charts show responsibility data for UI overpayments for CY 2000 to 2004. Claimants are responsible for the majority of overpayment errors for both the annual report rate and the operational rate. The distribution of overpayments by responsibility changes little from year to year. The responsibility categories claimant and employer, employer and agency, and third parties account for very small percentages of the overpayment errors and are displayed as part of the “Other” category.

Responsibility For UI Overpayments
Operational Rate

2004 4.0% 0.4% 0.3% 0.6%

2003 3.5% 0.6% 0.4% 0.6%

2002 3.6% 0.4% 0.4% 0.6%

2001 3.5% 0.5% 0.3% 0.5%

2000 3.8% 0.4% 0.3% 0.4%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

             Claimant             Claimant+Agy            Agency               Other

Responsibility For UI Overpayments

2004 5.8% 1.5% 0.6% 0.9% 1.1%

2003 5.2% 1.4% 0.7% 1.0% 1.1%

2002 5.3% 1.4% 0.5% 0.7% 1.2%

2001 4.9% 1.2% 0.6% 0.8% 0.8%

2000 5.2% 1.4% 0.6% 0.6% 0.8%

   0.0%      2.0%                  4.0%             6.0%                       8.0%                  10.0%

Percent of UI Benefits Overpaid

      Claimant     Agency            Employer              Claimant+Agy                           Other

Denied Claims Accuracy

The underpayments estimated from BAM paid claims samples represent underpayments only for those claimants eligible for unemployment compensation (UC). Underpayments also result when claims for UC are erroneously denied. Each week, BAM units in the State Workforce Agencies select samples of denied UC claims from three populations, defined by the type of issue on which the denial was based -- monetary, separation, and nonseparation (continued eligibility). Results for CY 2004 and CY 2003 are summarized in the following table. The adjusted improperly denied rates exclude those denials for which the state agency had issued a redetermination establishing eligibility independent of the BAM investigation and denials that were reversed on appeal.

                                            CY 2004          CY 2003*              Change

CY 2003 - CY 2004
Monetary Denials
Number of Monetary Denials 1.22 M 1.23 M - 0.01 M Improperly Denied 14.22% 11.34% + 2.88 Adjusted Improperly Denied 9.20% 6.87% + 2.33 Separation Denials Number of Separation Denials 2.11 M 2.17 M - 0.06 M Improperly Denied 8.28% 8.01% + 0.27 Adjusted Improperly Denied 5.98% 6.16% - 0.18 Nonseparation Denials Number of Nonseparation Denials 2.08 M 2.18 M - 0.10 M Improperly Denied 11.80% 11.78% + 0.02 Adjusted Improperly Denied 9.45% 9.34% + 0.11

• CY 2003 data exclude Michigan, which did not complete a sufficient number of sample cases to produce
  statistically reliable estimates.

BAM Accuracy Rate Definitions

Rate Sample Type Action Code Cause Annual Report 1 - Paid Claims 10 - Fraud All cause codes.
11 - Nonfraud recoverable
12 - Nonfraud nonrecoverable
13 - Technically proper due to finality rules
15 - Technically proper due to rules other than finality or formal warning rule
Operational 1 - Paid Claims 10 - Fraud 100-159 Benefit year
11 - Nonfraud recoverable
earnings
300-329 Separation
400-419 Able and available
430-439 Refusal of suitable work
440-449 Self-employment
450-459 Illegal alien status
470-479 Other eligibility issues
480-489 Identity theft
500-519 Dependents
Underpayment 1 - Paid Claims BAM investigation determines that All cause codes. the payment was too small:

20 - Supplemental check issued/offset applied or increase in weekly benefit amount (WBA), dependents’ allowance (DA) entitlement, maximum benefit amount (MBA), or remaining balance
(RB).
21 - Technically proper due to finality rules.
22 - Technically proper due to rules other than finality.

Rate Sample Type Action Code Cause Improperly 2 - Monetary BAM investigation determines that For Action codes 20-23: Denied 3 - Separation the denial determination was
4 - Nonseparation improper or benefit payment was too All causes except 700 -
small: 729.

20 - Official agency action finds the For Action code 24: claimant to be eligible for a supplemental check issued/offset 710-719: Claimant not applied or increase in WBA, DA, entitled to benefits due to
MBA, or RB.
other issues affecting the
21 - Technically proper due to finality claim. rules.
22 - Technically proper due to rules 720-729: Claimant not
other than finality.
entitled to benefits
23 - Supplemental check
because no week was
issued/offset applied which was later claimed. (Codes valid only officially reversed, revised, adjusted for Sample Type 3 or 4.) or modified, and BAM disagrees with the official action.
24 - No payment is due to the claimant.
Adjusted 2 - Monetary Same as Improperly Denied minus: For Action codes 20-23: Improperly 3 - Separation Denied 4 - Nonseparation Prior Agency Action codes 20-29: All causes except 700 -
Agency was in the process of
729.
resolving issue and took correct action before DCA investigation For Action code 24: completed or agency had correctly resolved issue prior to sample being 710-719: Claimant not
selected.
entitled to benefits due to
other issues affecting the

• or -
  claim.

Results of Appeal of Initial
720-729: Claimant not
Determination codes 1 - affirmed, entitled to benefits eligible; or 3 - reversed, eligible. because no week was claimed. (Codes valid only for Sample Type 3 or 4.)