The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
It sounds like a good problem to have: receiving more than expected in your state’s weekly jobless benefit check. But experts say a state overpaying your unemployment insurance (UI) could turn out to be costly. As the unemployment rate is predicted to rise in 2023, more people will lose income and potentially face this problem.
Here’s what happens when your state overpays your UI benefits and six steps you can take if you find yourself facing this problem.
What happens when your state overpays your UI benefits?
If you’ve somehow ended up receiving more than you should have, you’re likely going to get a notice about your state trying to recoup those additional payments.
During the peak of the COVID-19 pandemic, many states had trouble handling the massive amounts of jobless claims, and others were hit with fraudulent filings that made the situation even more difficult to control. States frequently had to request that unemployed workers return overpaid UI amounts.
Though the unemployment rate is currently at a historical low, economists polled in Bankrate’s Economic Indicator survey predict that a recession could lead to a loss of jobs in the coming year, with the unemployment rate forecasted to rise to 4.6 percent. As job losses increase, it’s possible that states could face another situation where unemployed workers are getting incorrect amounts paid to them.
What to do if this happens to you
1. File an appeal or overpayment waiver with your state
UI isn’t a one-size-fits-all program. Each state has a different way of administering and handling funds. Accordingly, you should check your specific state’s requirements for resolving overpaid benefits.
In almost all cases, especially if you are not to blame for the overpayment, you should still look into filing an appeal or overpayment waiver or take any other kind of formal forgiveness-seeking procedure with your state.
In some cases, that process can be time-consuming and costly. Individuals who disagree with a refund notice in New York, for example, have to request a hearing, though claimants aren’t asked to pay back the additional balance during that time. Most of those appeal processes would likely require an individual to show no indication of fraud, misrepresentation or technical fault on their behalf.
Others can potentially have overpayment forgiven in the case that it was no fault of their own, says Michele Evermore, an unemployment insurance expert and senior policy analyst at the National Employment Law Project.
“What that means is the agency may have made a mistake and there’s no way you could pay it back without having severe economic hardship,” she says. “If you didn’t do anything wrong and it was an honest mistake, it can often be delayed.”
Some states will not forgive overpaid UI no matter the cause, though. The Texas Workforce Commission (TWC), for example, states that the claimant must pay back overpaid benefits even if the overpayment wasn’t their fault.
2. Look into your state’s overpayment collection process and try to negotiate a payment plan
Each state also has a different process for how it collects those overpayments. Some will choose to garnish them from your additional unemployment checks over a certain period of time. In Texas, for example, if you’re still collecting unemployment while you have an overpaid balance due, the Texas Workforce Commission (TWC) will collect the weekly UI benefits and apply them to the overpaid amount until it’s fully repaid.
Other states, including North Carolina, let claimants pay those filings through credit or debit card, as well as a check or money order. That also includes garnishing your federal and state tax refund and lottery winnings. Most of the time, the amount is too small for prosecution, Evermore says.
States also typically let you negotiate a repayment plan. It’s worth a shot to see if you can avoid paying back that balance — or at least pay it in smaller chunks — if you’re still facing job loss or a severe income disruption.
3. Pay attention to changes on Capitol Hill
Paying attention to what lawmakers on Capitol Hill are doing is an important step, especially if you’re in the appeal process or trying to delay your repayment. As the economy is in flux, so too are the guidelines around unemployment benefits. For example, a number of important changes were made to UI rules during the COVID-19 pandemic that made it easier for unemployed workers to waive repaying overpaid benefits.
4. Look back at your income statements and calculate the benefit for yourself
Generally, the amount you receive in weekly UI benefits is based off of a percentage of the income you were earning before a job loss.
In California, for example, weekly benefits are determined by the quarter in which you earned the highest amount while employed, and the weekly payment will be between $40 and $450. If you earned $10,000 in your highest paid quarter, then your weekly UI payment would be $385.
You can often find how UI benefits are calculated on the website of the department that administers UI for your state.
Stay up to date with any documents your state gives you about your benefit amount, and compare them with what you receive each week in checks. Meanwhile, it might be worth doing your own calculations, so you can cross-check your weekly UI total for any possible mistakes.
5. Keep your expenses under control
If you are worried or suspect there could be a mistake in how much you’re receiving in benefits, it might be worth socking the money away for now as you reach out to your state unemployment office.
Limiting your expenses is a wise move regardless, as the U.S. economy moves toward a potential recession, which could lead to more economic uncertainty and less income stability. Funds for any expenses you can cut back on can go toward boosting an emergency fund to serve as a guardrail during financial hardship.
6. Don’t let it deter you from applying
Fears of getting more than you should in UI shouldn’t deter you from seeking out a program that, while riddled with challenges and administrative issues, can be the difference between making rent and affording meals or not.
“Don’t consider it the end of the world,” Evermore says. “There are routes for appeal, and people should take them.”
How to appeal unemployment overpayment
If you’ve received a notice of overpaid UI benefits that doesn’t match up to your calculations and leaves you confused, it’s possible that it’s incorrect. Federal law mandates appeal rights, so no matter what state you’re in, you can appeal claims of overpayment. The process of appealing will vary by state, though.
The amount of time given to appeal is one factor that varies by state. Where a state doesn’t have set guidelines for the time given, federal law sets a 30-day requirement. States may implement a shorter deadline, though.
Typically, you can appeal by writing a letter or filling out an appeal form and submitting it through mail, at a nearby office or online to the state department that administers UI. The written appeal should include:
- Your name
- Your Social Security number
- Your address
- The date you received an overpayment determination notice
- A copy of the determination notice
Check your state’s website for any state-specific requirements needed to submit an appeal.
You may or may not have to continue repaying overpaid benefits while the appeal is pending. In Texas, for example, the state will continue collecting benefits to repay the determined overpayment amount during the appeal process. However, if the claimant isn’t requesting benefits, they do not have to send payments during the appeal process. In California, meanwhile, claimants can’t begin repayment unless and until an appeal is denied.
It’s important to read through all notices your state sends you and double check the information. That way, you can look out for incorrect claims of overpayment or avoid being overpaid in the first place and having to deal with unexpected complications later on.
— Bankrate’s René Bennett contributed to an update of this story.