Report: Most unemployment benefit overpayments went to low-income workers

BOSTON (SHNS) – More than half of Massachusetts workers who have collectively received $2.3 billion in overpaid unemployment benefits during the pandemic are on the lowest rung of the income ladder, data shows. recently released state reports, prompting top lawmakers to warn that pursuing reimbursement would be tantamount to “chasing pennies with dollars.”

In a report filed this week, the Baker administration estimated there were about 352,000 outstanding cases of workers who received more money in unemployment assistance than they should have had between March 8. 2020 and January 31, 2022.

The analysis, which was provided to the news service by the labor committee chairmen, highlights the thicket of overpayments that has created headaches for Beacon Hill and for hundreds of thousands of workers.

It also lands as the Baker administration waits to hear whether US Labor Secretary Marty Walsh will grant Massachusetts permission to forgive all overpaid dollars that have passed through federal programs.

Pressure on the state’s unemployment system has skyrocketed during the pandemic, with government-ordered business closures and rapid changes in public behavior leading to widespread layoffs.

In 2019, before COVID-19 hit, the Department of Unemployment Assistance paid $1.4 billion in benefits to about 400,000 people. That jumped to $21 billion in benefits for nearly 2.25 million claimants in 2020 and an additional $12 billion in benefits for more than 1.7 million claimants in 2021.

The Executive Office of Labor and Workforce Development said in its new report that about $2.3 billion of those recent payments were made with the wrong amount and remain unresolved. In many cases, workers received overpayments through no fault of their own, often as a result of changes in federal government guidelines.

Baker administration officials split the overpayment pool into two categories: About $681 million was paid out to about 201,000 regular unemployment insurance claimants, while another $1.65 billion went to been paid to 151,000 recipients of the expanded Pandemic Unemployment Assistance eligibility, or PUA program and related supplements.

More than 65,000 of regular Unemployment Insurance claimants and 138,000 of PUA claimants, collectively representing about 57% of all Bay Staters with excess unemployment benefits, had approximate earnings between $0 and $27 $800, according to administration data.

At the other end of the spectrum, more than 15% of Massachusetts claimants who received overpayments of unemployment benefits had incomes above $88,920, the highest of nine levels outlined in the report.

About 15% of overpayment recipients had incomes between $27,872 and $52,000, and the remaining 11.6% had incomes between $52,001 and $88,920, the Baker administration estimated.

For the chairs of the labor committee, Representative Josh Cutler of Duxbury and Senator Patricia Jehlen of Somerville, this disproportionate impact on low-income people was “glaring”.

Cutler and Jehlen, in a joint statement, called Secretary of Labor and Workforce Development Rosalin Acosta’s request a blanket waiver to forgive residents for refunding any non-fraudulent overpayments made. under federal programs as a “welcome step”.

“As Secretary Acosta correctly observed, the waiver review process is laborious and frustrating and can create roadblocks, especially for communities hardest hit by the pandemic,” the two Democrats said. “This logic also applies to state and federal overpayment recoveries.”

A large majority of the overpaid dollars, about $1.95 billion, came from the federal government rather than state coffers.

So far, the Baker administration said in its report that the state has recovered about $221 million from about 63,000 claimants.

Any worker may apply for an individual waiver of the requirement to repay excess unemployment dollars, and the DUA may grant this relief in no-fault cases if the individual has less income than expenses, has used the additional funding to cover atypical expenses such as debt, or have forgone other sources of help because they received unemployment assistance.

The administration expects to recover about 12% of overpaid funds if current trends continue, excluding cases involving identity verification issues. This would incur costs of approximately $50 per individual waiver request and $150 for each worker who appeals a denied waiver, which could be a considerable price tag if many of the hundreds of thousands of claimants seek redress.

Acosta warned in his letter to the federal government that reviewing each overpayment on a case-by-case basis would be “painstaking” for the state office, and Cutler and Jehlen also warned that the benefits of pursuing refunds were not worth it. the inconvenients.

“Measurement of additional collection costs against a low expected recovery rate raises concern that we are chasing pennies with dollars,” Cutler and Jehlen said. “Enforcement efforts should be focused on fraudulent cases, not reimbursements for people who would otherwise be eligible for a waiver.”

State labor officials said a significant portion of outstanding cases — 72% of regular Unemployment Insurance overpayments and nearly 31% of PUA overpayments — involve claimants with identity verification issues, which are “probably related to fraudulent claims”.

The federal government has yet to respond whether it will respond to the Baker administration’s request to issue a blanket waiver for overpaid benefits through the PUA, Federal Pandemic Unemployment Compensation ( FPUC), Pandemic Emergency Compensation (PEUC) and Mixed Unemployment Compensation (MEUC) programs.

Acosta said this week that she believes Washington officials “want to work with us” to resolve the issue.

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