INDIANAPOLIS, Ind. (ADAMS) – One Indiana lawmaker wants the state to stop trying to collect unemployment payments that people across the state should never have gotten.
On Tuesday, State Senator Karen Tallian called for the state to stop trying to collect unemployment overpayments. Indiana is in the process of trying to claw back some of the $100 million dollars it made in overpayments.
Tallian says many people cannot afford to pay the money back. She also says the state’s unemployment office is a mess, and there are not many answers about who owes what and how they were overpaid.
Tallian issued the following:
“Repayment Notice”: You must repay the several thousand dollars that you received from IN Unemployment Insurance (UI) during COVID. How would you like to receive THAT notice in the mail? Well, thousands of Hoosiers have and are struggling to figure out how and why they have to pay back funds the Department of Workforce Development (DWD) told them was theirs and had already been spent on important bills like mortgage and utilities.
Let me take a minute to explain what is going on not only in our state but nationally.
UI benefits are paid out of a UI Trust Fund to people out of work through no fault of their own. The money in this fund fully comes from payments made by employers based on the number of employees they have and how often their employees access the fund due to layoffs. This program has been in place as a social safety net for decades and is backed through federal regulations and aid during economic downturns. Enter the world changed by the so-called “gig economy” where many people are self-employed or independent contractors; normally they would not qualify for UI benefits. Now, alter that world with COVID, and 2020 produced a situation where the social safety net was no longer sufficient. In 2020, the federal government, through bipartisan legislation and executive orders, put together a system that would help those types of workers access unemployment benefits through a new but temporary program called the Pandemic Unemployment Assistance (PUA) program.
It was put together quickly and heaped on top of state UI systems that were already overwhelmed. In our state, over 800,000 individuals made claims for benefits, drastically exceeding the normal 50,000 applications that DWD might see in a year. DWD had to wait for federal guidelines on eligibility and funding, set up a new administration program and then paid out claims. Although I could not get a precise number of PUA participants, I was assured that it was “over 100,000”.
In 2021, the federal government sent out a notice that PUA recipients must now show “proof of employment,” which includes a variety of documents evidencing that they were paid for jobs in 2019. DWD must do an “audit” of each claim and retroactively determine whether the person who received PUA did qualify. This means that a person who has a small business where they are self-employed, or maybe worked as an independent contractor and was out of work because of the COVID shut-down, was told by DWD they could apply for unemployment benefits through the new PUA program. Yet now, they have to retroactively provide documents they didn’t know they would need and are being told that it has now been determined by DWD that they didn’t qualify and they have to repay the funds they received. This is not their fault, they were assured that they could apply and followed the rules at the time.
Placing this level of financial stress on Hoosier families is unnecessary, as the federal government also gave states the authority to WAIVE those re-payments. While DWD has not said how many people have applied for a repayment waiver or what the total cost would be, Indiana can afford to issue waivers even if it reaches into millions of dollars. Remember, not only did the federal government fully fund the PUA program, but Indiana also received billions of dollars through a combination of the CARES Act (2020) and the American Recovery Plan (2021) and “donated” $900 million of that to the UI trust fund.
The bottom line is this: Indiana has a lot of money that it received from the federal government to assist unemployed people. It costs this state nothing to use federal dollars to waive the repayments made in error, not in fraud. And, the state can do this quickly. In data sent to the US Department of Labor, DWD reported that only 5% of our overpayments were due to fraud. We should not be asking struggling families to pay back money for which they were eligible and no longer have. We should not be delaying these payments trying to avoid fraud that only makes up a minute portion of overpayments.
The state can afford to be generous to those people who were out of work because of COVID. We need to support a waiver program and we need to help recipients through the process of how to ask for it and quickly receive relief.
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