What if I Receive an Overpayment of Benefits?
I would be excited to check my bank account and see that I was paid more money than expected. However, it is not a good thing if your state overpays your UI benefits. Many states have found that they accidentally made overpayments in the rush to get funds to struggling Americans during the pandemic. Now they want the money returned. It creates a problem since most people who received more than expected did not realize it, and the money has been spent.
What happens if you were overpaid?
If you received a payment of benefits that is more than what you should have, you would probably be notified that the state is trying to have the additional payments sent back. There could be various reasons that you were overpaid.
States have been trying to handle an influx of claims. Since COVID-19 hit, more Americans than ever before are needing financial assistance. In their efforts to stay on top of things, mistakes may have been made. Some states are running into the issue of fraudulent claims. And sometimes, a former employer may not agree with your claim amount, which could cause a problem with the claim.
It may not be your fault that you have been overpaid, but what happens next will depend on what program you have requested benefits through. The procedure may also vary slightly from state to state.
What should you do in this situation?
- Determine which benefit program you are on and what your state requirements are.
Because UI is handled differently from one state to the next, you will have to see what is being done in your state. Keep in mind that states are handling more than they are accustomed to because of the extra relief funds created to help people through the COVID-19 pandemic. Along with the additional programs, there are also a lot more people submitting applications.
Each state still has the regular UI program. When people have used their maximum allowable benefits through UI, they can turn to the CARES Act, which allows an extra 13 weeks of support. The Pandemic Emergency Unemployment Compensation (PEUC) and Federal Pandemic Unemployment Compensation (FPUC) are also available for those still needing assistance.
PEUC and FPUC are federal programs, and states can waive any overpayments in those programs. However, the individual state programs are different, and each state will be dealing with overpayments in its own way.
The Pandemic Unemployment Assistance (PUA) program has also issued overpayments to some individuals. The program, created by the CARES Act, has helped people who are not generally eligible for UI get assistance. Freelance and gig workers have received payments because of this program. Still, because things were done quickly, mistakes were made, and now people are dealing with figuring out what to do.
2. File an appeal or overpayment waiver with your state.
The process you follow will depend on the state in which you live. If you have received an overpayment, you should see what is required to file an appeal or overpayment waiver.
It may be time-consuming and costly. In some states, if you disagree with a refund notice, you would have to request a hearing. An appeal hearing would mean that you will have to prove there has not been any fraud, misrepresentation, or technical fault on your part.
In some states, if the agency made a mistake, you may not have to pay it back if doing so would cause severe economic hardship. Sometimes honest mistakes happen. In such a case, the payment may be waived or, at the very least, delayed.
3. Negotiate a payment plan to pay back the funds.
If the money has been spent, you may be able to negotiate a repayment plan so that you will not have to pay the full amount all at once. Some states may garnish your UI until the additional funds have been recuperated.
In other states, you may agree to let the government keep a percentage of any future UI benefits until the balance has been returned.
Some people may wish to get the debt repayment finished right away. Some states may allow the overpayments to be repaid through debit or credit card transactions. They may also take a check or a money order.
Other ways states may try to recoup the money is by garnishing federal and state tax refunds and any lottery winnings if applicable.
Find out how your state is dealing with the situation and see what you can negotiate. If you have remained without a job, you may be able to avoid paying back the balance.
4. Watch for news from Capitol Hill.
Paying attention to what the lawmakers are doing and saying is important, especially if you are drawing UI from the PUA. Things may not be set in stone yet, so keep up to date on any changes being made.
5. Calculate your benefits.
Knowing how much you are supposed to be receiving in benefits means that you should notice it right away if you receive an overpayment. That way, you won't spend the money knowing it does not belong to you.
The amount you should be receiving is based on a percentage of your income. If you stay up to date with information your state releases about payments, you should know how much you will receive. Watch for possible mistakes so that it can be rectified before it causes hardship.
6. Watch your expenditures closely.
If you think you may have received a larger payment than you should have, do not spend the money. Knowing you may have to repay the funds, it would be a good idea to put it away and contact your state's unemployment office to review your file. If they confirm there was no error made, then the money is yours. But, if there was an error, you will have to pay the money back.
Experts are suggesting reducing spending where possible in any case so that you can build an emergency fund. Not knowing when the pandemic will end or the toll it will take, it is a good idea to be cautious with your money.
7. If you think you are eligible, apply.
Do not be afraid to apply for fear of having to return the money. If you need assistance and think you are eligible, submit your information. Just remember to fill out all documentation honestly and have the paperwork to prove your employment history.
While many are finding themselves in a financial crisis or experiencing hardship, programs are being developed to offer support. As long as you are honest about your situation and have paperwork to back your claims, you are safe to apply for the benefits.