Both state and federal regulators are taking steps to make improvements in how Unemployment Insurance is distributed. Certain situations are causing a waste of resources to happen. Other situations are allowing for unemployment insurance fraud. Things are about to change.
When the economy went bad a few years ago, this caused unprecedented numbers of people to lose their jobs. Most of these people were eligible for unemployment insurance benefits. While the economy has slowly seen some signs of improvement, there are still large amounts of people who have been unable to find work.
This has put considerable stress on the unemployment insurance system within each individual state, as well as federally. Regulators have started looking for ways to make the unemployment insurance program more efficient.
Doing so should help prevent waste, and also prevent certain kinds of fraud from happening. Ideally, the changes would result in there being more money available for people who truly need, and are eligible for, unemployment insurance benefits.
One of the situations that needs to be improved is the amount of money that unemployment insurance departments are overpaying people. The overpayment rate was 11.6% between March of 2010 and March of 2011. This factors out to around $1.00 of extra pay-out for every $9.00 of appropriate payment for benefits. Around 9.3 million Americans receive unemployment insurance benefits.
What is causing the overpayments to happen? Some people are neglecting to inform the unemployment department in their state when they have found a new job. For full-time workers, this means that they are working, and receiving their unemployment insurance benefits, at the same time.
For part-time workers, this means that they are getting more money from their benefits than they should be getting. The benefits are designed to be reduced in response to the amount of income a person makes. Other people are receiving benefits, but not complying with the requirement that they continue to actively look for work.
The other reason for the overpayments falls squarely on employers. Some are choosing not to give state officials the reasons why an employee lost his or her job. This makes it difficult for the unemployment departments to determine whether or not a person is eligible for benefits. It is worth noting that a person’s previous employer has to pay a portion of a former worker’s unemployment benefits. Some employers could be trying to avoid having to pay.
State and federal officials plan to reduce the amount of overpayments in a number of ways. They are creating a national directory of new hires that will alert the system to situations where people are working and continuing to receive unemployment benefits. People doing so will be caught faster. A new computer system will make it easier for employers to report the reasons why a former worker no longer is employed there.
A new law will let states take overpayments of unemployment benefits out of a person’s United States income tax refunds. A proposed law would place a 15% penalty on people who got benefits when they shouldn’t have. Software will automatically notify prosecutors when workers neglect to pay back an overpayment.
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