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Unemployment Benefits: What To Do If You Are Overpaid?

Updated : August 4th, 2020

The states provide unemployment benefits to help the unemployed meet their financial needs temporarily. States use different formulas to calculate the unemployment benefits. In general, the amount is determined by wages earned during the primary and alternate base period, and the amount given is half the wages. But in some cases you may be paid more than what you are eligible. So what should you do in such situations? Should you repay the overpayment of unemployment benefits? Figure it out here! 

What Is An Overpayment?

An overpayment is the extra unemployment benefits that are paid to a claimant who is determined not to be entitled to those benefits. 

Reasons for Overpayment of Unemployment Benefits

Overpayment of unemployment benefits can happen due to various reasons such as:

  1. You did not provide all details 
  2. You have committed mistakes while filing a claim 
  3. You have knowingly given misleading or false information 
  4. You were not willing, ready, and able to work
  5. You did not submit the report of work search activities

Types Of Overpayment 

Overpayment of unemployment benefits are of two types: Non-Fraud and Fraud.

1. Non-Fraud

This type of overpayment of unemployment benefits occurs if you receive an amount that you were not eligible but through no fault of your own. You don’t have to pay any penalty if you are overpaid in such situations but just repay the overpaid unemployment benefits.   

 2. Fraud

This kind of overpayment occurs when you give incorrect details, make false statements, or withhold information to get benefits. Fraud overpayment of unemployment benefits will cause you to be ineligible from receiving benefits for 1 year. 

Fraud overpayment will require you to pay a penalty in addition to repaying the overpaid benefits. The penalty amount may vary with states. Fraud overpayments exceeding $400 will be treated as a crime. 

 Common Reasons For Fraud Overpayments 

  • Working a full-time, part-time or temporary job but not reporting earnings
  • Not submitting the record of your work search
  • Filing a claim without looking for a job
  • Providing fake or incorrect information when filing for benefits or a weekly certification
  • Not reporting severance and bonus pay

 How To Avoid Overpayment Of Unemployment Benefits?

When the authorities find out that you have been overpaid, they may carry out an investigation and disqualify you from receiving the benefits, if proven guilty. Therefore, it is wiser to take necessary steps to avoid overpayment. Some of them include:

  • Actively look for job opportunities
  • Provide accurate and complete information to DES when you file for benefits and weekly certifications
  • Maintain and submit your work search record
  • Report gross wages 
  • Report all income earned for each week you work 

Will You Be Notified If You Are Overpaid?

The authorities at the state unemployment department will notify you through mail if you have been overpaid. The notice will include how much penalties you owe (if applicable), instructions on how to appeal and repay the overpaid amount.

What Happens When You Receive Notice of Overpayment?

When you are overpaid, you will receive a notice of overpayment from your state unemployment department. If you don’t request a waiver or appeal, the authorities at your state unemployment department will recover the overpaid amount from your unemployment benefits, provided you are still receiving them. During the process, you will receive lesser amounts. Once they recover all the overpayment, you will receive benefits you are entitled to get. 

If you are not receiving the benefits, then the authorities will recover the overpayment by collecting the money from your tax refund. If they cannot recover all the overpayment for the time being, it will collect the money from your future benefits, if you file for any. 

How To Request A Waiver?

A waiver forgives complete or a portion of the benefits you have been asked to repay. You can request for a waiver only if you have received the overpayment by mistake, i.e., non-fraud overpayment. 

You should request for a waiver within 15 days of receiving the notice. You can apply for a waiver by filling your state’s overpayment waiver request form. 

How To File An Appeal?

You can file an appeal if your waiver is denied. In many states, you will be entitled to a hearing before an administrative law judge to consider your appeal. 

How To Repay Overpayment Of Unemployment Benefits?

You can repay the overpayment of unemployment benefits by sending a check to the unemployment office. If you are unable to pay at once, you can negotiate a payment plan.

Final Words 

Whether you have overpayment due to your fault or through no fault of your own, you must repay the entire amount. If you have any queries, then contact your state unemployment office for clarification. 

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