$14 Billion in Jobless Benefits Overpaid in ’1

$14 Billion in Jobless Benefits Overpaid in ’11

The unemployment insurance system in America suffers the second highest rate for “improper payments” of any federal program, behind the National School Lunch Program, and overpayments topped $14 billion last year alone.

The overpayments accounted for 11 percent of all jobless benefits paid out by the federal government and states in 2011, according to reports from the U.S. Labor Department.

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 quit voluntarily, and those who continue to collect after returning to work. All are ineligible for benefits.

A small number of cases constitute deliberate fraud of the system, using fake documents or identities, often involving prison inmates, illegal immigrants or even deceased persons, CNN Money reported.

“Unemployment checks are going to graveyards,” Vice President Joe Biden said in September as the federal and state governments launched an effort to stem the overpayments and collect those already made.

The Labor Department estimates that half of its overpayments are recoverable, but historically only about a quarter of the recoverable overpayments have actually been collected.

When the government finds an overpayment, it often sends a letter demanding that the claimant return the funds. Government attorneys can also seek to recoup the money by setting up payment plans, garnishing wages, or deducting money from income tax refunds. Punishment can also include probation, but jail time is rare.

Last year there were about 2,700 convictions for fraud related to unemployment benefits, according to CNN Money.

Among the states, Indiana was the worst offender for overpayments, dishing out more improper payments in 2011 than correct ones.