States Overpaid Covid Claims, Now They Want the Money Back

Mish

A rush to get out checks resulted in claims being paid that shouldn't have been paid.

Oops Money Already Spent

Please consider States Overpaid Coronavirus Unemployment Claims

Cher Haavind, deputy executive director of the Colorado Department of Labor and Employment, says many overpayments stemmed from workers incorrectly reporting their earnings.

States can waive recovery of overpayments for most unemployment insurance when there is no fraud involved, but the Pandemic Unemployment Assistance program follows a different set of rules. It is administered as a form of disaster relief, and the statute that guides it blocks states from forgiving the debts.

Adding to the complexity, the PUA program gave new categories of workers—including gig workers and the self-employed—access to unemployment checks. But state unemployment systems were designed to calculate benefits based on traditional jobs, employer records, W-2 tax documents and verifying income with pay stubs. Re-engineering the systems to account for far more complicated self-employment income was bound to create problems, experts say.

In Ohio, thousands of workers have been overpaid through the regular unemployment-benefits system and Pandemic Unemployment Assistance, says Michelle Wrona Fox, a staff attorney at Community Legal Aid Services in Youngstown, Ohio. For some of Ms. Fox’s clients, the state is docking their remaining benefits by half to recoup its money.

“I’m seeing complete panic,” she says. Many of Ms. Fox’s clients waited two to three months to get benefits in the first place, she says, and some are facing eviction. “They’re in dire straits,” she adds.

A spokesman for Ohio’s Department of Job and Family Services says about 20% of PUA claimants, or 108,000 people, had been overpaid as of Aug. 31 because of a combination of errors by the agency and claimants, but adds most of the errors arose from individuals failing to claim income they earned in weeks when they also received benefits.

Tip of the Iceberg

The article highlights errors in Pennsylvania, Ohio, and Colorado.

Some received $10,000 or more too much. One person was overpaid  overpaid by $13,969.

Three states is likely the tip of the iceberg.

Fraud?

I suspect so. Individuals failed to claim income they earned in weeks when they also received benefits.

The less money you reported, the higher the benefits you received. 

Some of this was accidental. But how much was purposeful?

Checks Stopped

Meanwhile the checks stopped on September 5. That's when the PUA benefits expired. 

For discussion, please see Little Progress on Unemployment Claims but Checks Grind to a Halt.

It is not possible to lower payments to make up the difference, yet the money has been spent.

Mish

Comments (23)
No. 1-12
Eddie_T
Eddie_T

So....will this now result in people with no means whatsoever being billed for money they don't have and never will have?

Similar problem with the withholding tax deferment. People who never had to save to pay their taxes......and who probably never had a lot of savings pre-COVID anyway..how are they going to be able to play catch-up?

Answer, they won't be able to pay...and neither will people who got too much unemployment.

In spite of some fraud (and there is some, no doubt) the best thing is to forgive it. Otherwise it will turn into a nightmare.

PecuniaNonOlet
PecuniaNonOlet

So that is why apparel went ballistic during the past few months. It all makes sense now.

Eddie_T
Eddie_T

Yachts too. Different class of fraud though.

Greggg
Greggg

Where ever there is government money, there is fraud. I'm sure this will end up as another bipartisan bill that won't work. Funny how much of the fraud was from overseas... they got scammed but Nigerians. i wonder if a Prince was involved in that one too.

Captain Ahab
Captain Ahab

Does anyone really expect anything else from a government program? Got to wonder what will happen with single-payer Govt. health insurance.

Lance Manly
Lance Manly

I thought PUA was 39 weeks of benefits:

"In general, PUA provides up to 39 weeks of unemployment benefits to individuals not eligible for regular unemployment compensation or extended benefits, including those who have exhausted all rights to such benefits."

Casual_Observer
Casual_Observer

Why does it matter when money is free to create ?

Dodge Demon
Dodge Demon

Remove the toilets from their houses. They’re worth about $300,000 for a property tax credit in Crook County, IL.

numike
numike

Trump appears to be wincing in pain while he breathes https://twitter.com/brenonade/status/1313263278613827585?s=21

KidHorn
KidHorn

The best solution was to give the money to the states to use in their existing unemployment systems. They already had systems in place to deter fraud. Let each state decide how to best implement it.

Realist
Realist

All levels of US Govt will continue to overspend until the pandemic is brought under control. And the economy will continue to sputter. Without national leadership; without a national plan for the pandemic; the US will keep drowning in debt. And considering the pandemic directly stresses a health care system (assuming you can call it a system) that costs almost double what it does in other developed countries, it is a perfect storm for the US. If only the US had a president who would deal with the number one issue in the country; the pandemic. Sadly, you don’t. Though I do hope Trump recovers from his personal infection.

Call_me_Al
Call_me_Al

The hours and manpower devoted to clawing back crumbs that were doled out to the masses will probably far exceed the resources used making sure far greater sums to businesses and megafarms are honest and true.

Penny wise, pound foolish coming and going -- bureaucracy maximizing waste and minimizing efficiency!!


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