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Surprise! Government Overpaid $14 Billion in Unemployment Benefits in 2011

cross bones Wrote: Jul 10, 2012 4:38 PM
Overpayments result from a number of factors. Decisions awarding benefits may be reversed on appeal. The law (Java Supreme Court case) requires that benefits be paid pending an appeal. Reversals of initial determinations (which generally result in denial of benefits more often than granting benefits) are high - between 25 and 40% Employer's often don't supply separation information until their account is charged, resulting in an overpayment. Yes, there is an element of fraud, but it is not the large part of the overpayment problem. Few overpayments are the result of bureaucratic error, though they have become more common since extended benefits have been in effect. In other words, the issue is more complicated than this blog portrays.


In yet another sad tale of government incompetence, the U.S. Labor Department reported that federal and state governments combined to overpay jobless benefits by $14 billion. This $14 billion accounts for about 11% of all unemployment spending. CNN reports:

But of the overpaid funds, most end up in the hands of three types of people: Those who aren't actively searching for a job, those who were fired or quit voluntarily, and those who continue to file claims even though they've returned to work. Any of those circumstances would make a person ineligible for benefits.