US Senate Investigates Unemployment Insurance Overpayments

by Mike Godfrey, Tax-News.com, Washington

27 June 2012

In a letter to the United States Department of Labor (DOL), the Senate Finance Committee Chairman Max Baucus (D - Montana) and its Ranking Member Orrin Hatch (R - Utah) have requested an update on its efforts to cut overpayments in half and prevent fraud in the Unemployment Insurance (UI) programme.

A year ago, at a hearing of the Finance Committee, the Assistant Secretary for Employment and Training Jane Oates testified on ways to improve the UI programme by decreasing costly overpayments. She had said that, with the proper action, overpayments could be cut in half within two years. Therefore, in a letter to Oates, the Committee’s leaders asked her to explain the DOL’s progress in meeting that goal.

According to DOL’s figures, overpayments in the UI program totalled over USD17bn in 2010. Those overpayments can be caused by UI recipients continuing to claim benefits after finding work, errors in the system verifying eligibility, or payments continuing to those who would otherwise be disqualified because they have stopped pursuing a new job or fail to meet other state requirements.

Oates had confirmed that the DOL had an aggressive plan to reduce the overpayment rate with the 11 largest states, and that it could get close to reducing the amount of improper payments by half – roughly USD8bn – within two years.

“At a time when millions of Americans are out of work, it’s outrageous to lose USD17bn worth of UI dollars to overpayment and fraud,” Baucus commented. “We need an aggressive strategy to strengthen our prevention efforts. Every penny of UI funding needs to be at work helping Americans pay the bills and return to employment.”

“In these times where our debt has reached record highs, it is more important than ever that we work to ensure that taxpayer dollars aren’t wasted or used in fraudulent activities. The DOL promised to combat waste, fraud and abuse within the UI programme. This letter follows (up)... to ensure that the Department is taking action to live up to its commitment to ensure taxpayer funds are not squandered,” Hatch added.