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State admits to overpaying unemployment benefits

Maryland's Division of Unemployment Insurance has recorded more than $30 million in overpayments of jobless benefits thus far in 2009. The record increase in unemployment claims this year puts the state on track pay more than $1 billion in insurance claims by the end of this year. Maryland recorded an unemployment rate of 7.2 percent in October, according to the US Bureau of Labor Statistics.

Trying to recoup the overpayments can be a tricky situation as the state would be attempting to collect payments from individuals who submitted claims because they were unemployed and without funds in the first place. Overpayments to filers are likely due to several reasons, including errors made by those requesting benefits, large increase in number of claims being submitted to the agency, older technology used to process the claims, and outright fraud.

Overpayments also affect Maryland's business owners as they have recently seen an increase in the unemployment insurance tax. Increases in claims, particularly fraudulent ones, can mean increases in their tax payments, especially as increases are mandated when the state funds fall below a certain level.

The state has received almost $4 million in federal funding to improve overpayment recovery, some of which most likely will be allocated to the acquisition of new software to better process the jobless claims, properly determine benefits and assist in recovery attempts. Thus far, the state has successfully recouped about half of the funds it has incorrectly paid out in benefits.


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