Unemployment Insurance (UI) Improper Payments

Glossary of Terms

Benefit Accuracy Measurement (BAM) program — Program designed to determine the accuracy of paid and denied claims in three major Unemployment Insurance (UI) programs: State UI, Unemployment Compensation for Federal Employees (UCFE), and Unemployment Compensation for Ex-Service Members (UCX). State Workforce Agencies select weekly random samples of these program payments and denied claims. State BAM investigators audit these paid and denied claims to determine whether the claimant was properly paid or denied eligibility. The results of the BAM statistical samples are used to estimate accuracy rates for the populations of paid and denied claims.

IPIA Improper Payment Rate — This is the improper payment rate for the UI program that the U.S. Department of Labor reports to the Office of Management and Budget, as required by the Improper Payments Information Act (IPIA). The IPIA improper payment rate is based on results of the BAM statistical survey, and includes both overpayments and underpayments.

Annual Report Rate — The annual report rate includes fraud, non-fraud recoverable overpayments, non-fraud non-recoverable overpayments, official action taken to reduce future benefits, and payments that are technically proper due to finality or other rules. The rate excludes payments determined to be "technically" proper due to law/rules requiring formal warnings for unacceptable work search efforts.

Operational Rate — The operational rate includes those overpayments that the states are reasonably expected to detect and establish for recovery using normal program operations.

Fraud Rate — The fraud rate is based on the population of benefits paid and is a subset of the Annual Report rate. The definition of unemployment compensation fraud varies from state to state. Because fraud determination criteria and thresholds very between states, the individual state rates reflect these differences.

Underpayment Rate — The underpayment rate includes payments that the BAM investigation determines were too small.