Best and Safest Practices for SUI Options

Making the election to opt out of paying the state unemployment tax in favor of reimbursing the state for future benefits paid to former employees may complicate the budget process, upset typical cash flow, and create uncertainty about potential risks. But the best and safest options for managing the perils are very clear.

THE PROBLEM: Attaining maximum use of every dollar of revenue requires a rigorous and strategic effort from nonprofit organizations, governmental entities and tribal enterprises, EVERY YEAR! The center point for that effort is always the “Annual Budget” formation, which for many fluctuates capriciously often because of:

• Competition for services and funding dollars

• Changing state funding

• Changing federal financial support

• Regulatory compliance issues

• Changing workforce problems and necessities

Yet when those complications threaten the budget process, use of thoughtful, strategic options sustains and supports positive cash flow, sustained compliance and reliable protection.

BEST AND SAFEST PRACTICES: Employers successfully transfer risk and manage a variety of diverse liabilities (property & liability, auto, workers’ compensation, umbrella, D&O, etc.) by engaging specific insurance products. It is indisputable that an insured risk by a reliable, reputable insurance company is the safest solution for defending against unknown future liabilities. Accordingly, liability such as State Unemployment Insurance is similarly effective. Here are five of the best and safest solutions available for managing the State Unemployment Insurance (SUI) cost:

1. Bonded Service Program: Risk free, first and last-dollar coverage with claims administration

2. Unemployment Savings Program: Proprietary interest-bearing reserve with claims administration and stop-loss insurance

3. Excess Loss Insurance: “Working Excess Coverage” fits level of risk retention that works best for the employing entity

4. Surety Bonds: Required in many states for “reimbursing employers”

5. Group Program Management: Program formation, consultation, risk transfer design and administration for nonprofit entities, governmental entities and tribal enterprises

For more information about the best and safest solutions for State Unemployment Insurance, contact First Nonprofit Group.


Source: First Nonprofit Group’s “Financial Mechanics of Funding SUTA” series