States That Overpaid Unemployment Compensation Want Their Money Back

Imagine receiving unemployment benefits for weeks, or even months, and then one day opening an envelope to find a bill for thousands of dollars instead of a check. That can’t be a good feeling.

It’s happening to thousands of people across the country.

As states work through verification of benefits and then reconcile with payments, they’re finding that many people have been receiving more than money than they should. When that happens, the state reduces the benefit.  What happens next depends on who made the mistake and who is paying the benefits.

If the state made a computational error and the benefits are from the state unemployment insurance program, then the state will forgive the over-payments. If the recipient made an error when filling out the forms, likely by misstating income, then the state will demand repayment. Whether that is in a lump sum or over time once the person finds a new job depends on the state.

If the benefits came from the new federal Pandemic Unemployment Assistance (PUA) program, then things change. It doesn’t matter who made the error, the state requires repayment because the funds come from a disaster relief fund which does not include a mechanism for forgiving over-payments.

So even if the recipient filled out everything correctly, if the government sent the wrong amount, it must be repaid.

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