Unemployment Insurance (UI) Improper Payments By State

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Unemployment Insurance Fraud

Note: Final 3-year average IPIA data for the period of July 1, 2011 through June, 2014.

Improper Payment Rate — the sum of the overpayment rate and underpayment rate, subtracting overpayments recovered, for the UI program for the reporting period required by the Improper Payments Information Act (IPIA). Figures displayed are not actual improper payment rate and dollars but an estimate based on results of State Benefit Accuracy Measurement (BAM) survey (random audits) of paid and denied claims in three major UI programs: State UI, Unemployment Compensation for Federal Employees (UCFE), and Unemployment Compensation for Ex-Service Members (UCX).

For the FY 2013 reporting, OMB approved a new methodology for DOL to measure improper payments that takes into account the "net" effect of UI overpayment recoveries. This methodology includes the two components that have been reported annually as part of the IPIA reporting requirements total overpayments plus total underpayments — which continue to be estimated from BAM, and subtracts the amount of overpayment recoveries, which are based on actual amounts reported by the state workforce agencies on the ETA 227 Overpayment Detection and Recovery reports for State UI, UCFE, UCX, and emergency UI programs.

In 2013, the Improper Payments Elimination and Recovery Improvement Act (IPERIA) was enacted requiring agencies to include all identified improper payments in the reported estimate, regardless of whether the improper payment in question has been or is being recovered. As well, any program that excludes recovered amounts from its estimate shall update its methodology to reflect the new IPERIA requirement. As a result, beginning in FY 2014, the Department cannot use the "net" improper payment rate for its improper payment rate measure. However, states will continue to be measured using the existing "net" improper payment rate methodology until the Department issues new measurement guidance for states.

Fraud Rate — a subset of the Annual Report rate and based on the population of benefits paid. The definition of unemployment compensation fraud varies from state to state and the individual state rates reflect these differences.