Section D

Collection Documents

Overview

Introduction System generated collection documents are an integral part of the collection process and can be an effective tool in the recovery of overpaid UI benefits. These documents put the debtor on notice that a debt is owed and payment is anticipated by return mail.
In this section The following topics will be discussed in this section.

Topic Page
Predetermination Notices 2
Overpayment Determinations 4
Installment Agreements 9
Billing Statements 12
Collection and/or Demand Letters 14
Summary of Guidelines 15

 

Predetermination Notices

Introduction Predetermination notices provide an opportunity for the claimant to participate in the fact-finding process when a potential overpayment situation is detected. Some SESAs use this document to schedule in-person interviews while other SESAs present the conflicting information and request a response by telephone or mail.
The document initiates the recovery process In addition to providing information about the potential overpayment, the predetermination notice should initiate the recovery process by providing:

  • Sufficient information for repayment of benefits if an overpayment is established.

  • An option to repay by enclosing a repayment coupon and return envelope.

Unique approaches Examples of recovery efforts during the fact-finding process include:

  • A simple statement, such as "Please do not send cash through the mail," on the predetermination notice to advise that payment is anticipated.

  • A statement that advises claimants that an overpayment may be established and they should be prepared to repay the overpaid benefits.

  • A request for payment in full when the fact-finding interview is concluded.

Guidelines It is recommended that SESAs:

  • Review and revise the predetermination notice to provide information about paying the potential overpayment.

    Include a repayment coupon and return envelope.

    Periodically evaluate the dollars received as a direct result of the predetermination notice to measure effectiveness and identify potential improvement areas.

 :

Overpayment Determinations

Introduction The overpayment determination is the first formal demand for repayment of overpaid UI benefits. The document includes:

  • Amount overpaid.

  • Reason for overpayment.

  • Administrative penalty, if applicable.

  • Monetary penalty, if applicable.

  • Right to appeal.

  • Repayment information.

Federal requirements Section 303(a)(1) of the Social Security Act requires that a state law include provision for:
"Such methods of administration...as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due."
Section 303(a)(3) of the Social Security Act requires that a state law include provision for:
"Opportunity for a fair hearing before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied."
Secretary of Labor interpretation of Federal requirements The Secretary of Labor has interpreted these provisions to require that an agency issue a written appealable notice of determination any time an action would adversely affect a claimant's right to benefits. Actions that require issuing a formal written determination are:

  • Overpayment determinations.

  • Orders for repayment or recoupment of any sum paid.

Document content Overpayment determinations must include (1):

  • The action which caused the overpayment and the amount of the overpayment in a single determination.

  • Any administrative penalty or disqualification from benefits.

  • The weeks the claimant was overpaid and the amount each week.

  • The total amount of the overpayment, and, if different, the amount the claimant is liable to repay.

  • The claimant's appeal rights.

  • The legal regulations that govern this document.

Document formatting SESAs are encouraged to explore the potential benefits of color, bolding, underlining, and other formatting features to improve the effectiveness of overpayment determinations as a recovery method.

The Kentucky (2) SESA shared the following information on the ITSC UI Web Site:

During a collection seminar, it was suggested that the use of color could improve recovery. A pilot project was initiated by the SESA to manually highlight names in blue, amounts due in yellow, and due dates in pink.
The results were immediate and significant as collections increased by 23 percent within the first thirty days after notices were mailed. The process has since been automated to download from the mainframe to a personal computer and then print the documents on a color printer.
Example of a repayment statement The goal in recovery is to collect an overpayment in the shortest period of time possible. The statement about repayment should provide clear, concise instructions. The following is an example of a statement that can be included in an overpayment determination:
You owe (dollars). Make your check or money order payable to (SESA) and send it to (address) by (date).
If you cannot pay the full amount owed by (date), you must enter into a monthly repayment plan. To establish a monthly repayment plan:

  • Fill out and sign the attached (name of form).

  • Mail the completed form, the payment coupon, and your first payment in the amount of (dollars) no later than (date) to (address).
When electronic funds transfer is not an option:
Monthly payment coupons will be sent to you when the first payment is received. Your payments are due on or before (date) of each month. Payments received after (date) are late and a (dollar) fee will be charged.
When electronic funds transfer is an option:
Your payments are due on or before (date) of each month. Payments received after (date) are late and a (dollar) fee will be charged.
Guidelines It is recommended that SESAs:

  • Include the following information in an overpayment determination:

    • The monthly repayment amount, in lieu of payment in full, that is acceptable to the SESA.

    • A statement on repayment.

  • Include a payment coupon and self-addressed return envelope with the overpayment determination.

  • Periodically evaluate the dollars received as a direct result of the overpayment determination to measure effectiveness and identify potential improvement areas.

  • Explore the option of repayment by electronic funds transfer.

  • Avoid the use of accusatory language.

  • Minimize the use of legalistic terminology.

  • Provide clear, concise information written at or below the standard eighth grade level.

  • Contain formatting and font size that improve overall readability of the document.

 

Installment Agreements

Introduction Many claimants are financially unable to repay an overpayment in one lump sum. However, they may be financially able and willing to pay their debts on an installment basis. Ideally, the installment agreement should be mailed with the overpayment determination.
First step in win-win negotiations Continued demands for full restitution can result in the claimant totally disregarding an obligation. The first demand should, however, be made for the full amount of the overpayment and then followed with an alternative to make installment payments.

Offering an alternative is the first step in negotiating a win-win solution.

Benefits of a written installment agreement In addition to communicating the terms of the agreement and ensuring they are understood, the benefits of a written agreement include the opportunity to request:

  • Pre-authorization for payment by electronic funds transfer.

  • Information such as spouse's name and social security number, bank information, name and telephone number of a close friend or relative not residing in the same household, etc. This type of information can benefit the SESA by providing skip-tracing leads or potential asset sources should civil action become necessary.

Electronic funds transfer Encouraging debtors to pay by electronic funds transfer can provide up-to-the-minute monitoring that allows SESA staff to immediately contact debtors who have not abided by their agreement.
Comparing collection strategies Many SESAs require the claimant to contact agency staff to initiate or establish a monthly payment agreement. This can prevent the SESA from taking a proactive approach to collecting overpaid UI benefits. The following table compares reactive to proactive collection strategies.

Type of Approach Example Result of approach
Reactive Overpayment determination provides amount overpaid and option to make installment payments by contacting the SESA. Collection staff respond to incoming telephone calls and correspondence requesting a monthly repayment plan.
Proactive Overpayment determination includes the demand for repayment in full as well as the monthly installment payment amount. The written agreement is mailed with the overpayment determination. Collection staff focus activities on contacting debtors who have not paid or established a monthly repayment plan.

Suggested negotiation sequence Many SESAs have established a schedule of minimum monthly payment amounts. However, care should be taken to ensure collection staff pursue recovery in a sequence that provides for negotiation.

  • Payment in full.

  • Suggested monthly installment payment.

  • Minimum monthly installment payment.

Suggested schedule for monthly installment payments To establish a negotiation range for use by collection staff, SESAs are encouraged to consider the following schedule.

If the amount overpaid is… then the suggested payment is… and the minimum payment is…
equal to or less than 2 times the WBA, 50% of amount due 50% of WBA or $50, whichever is highest.
Greater than 2 times the WBA and the WBA is $200 or less, equal to WBA $50.
Greater than 2 times the WBA and the WBA is $201 or more, equal to WBA 25% of WBA.

Program enhancement opportunities It is suggested that SESAs:

  • Encourage repayment by electronic funds transfer.

  • Consider a policy permitting overpaid claimants to liquidate debts on an installment plan based upon the SESAs statutory limitations.

  • Pursue legislation that enables the SESA to report delinquent or untimely debts to credit bureaus.

  • Provide training to staff to develop telephone collection techniques and negotiation skills.

  • Pursue legislation to support assessing a fee to establish and/or re-establish installment payment plans.

 

Billing Statements

Introduction Billing statements are routinely mailed to debtors much like monthly revolving charge account statements. Information contained in billing statements include:

  • Current balance.

  • Overpayments established/canceled during the period.

  • Charges such as interest and other fees.

  • Payments.

Benefit of monthly billing statements The benefits of using monthly billing statements as a recovery method are:

Response to Billing Statement Benefit or Result
A payment (or response of some type)
  • Revenue
  • Debtor contact
    • No response
  • Target for intensive collection activities
    • Returned mail
  • Initiate skip-tracing techniques to locate debtor

    • Guidelines It is recommended that SESAs:

    • Develop criteria for when and how long to send billing statements when the debtor does not respond.

    • Provide repayment coupons and return envelope.

    • Periodically evaluate the dollars received as a direct result of the billing statement to measure effectiveness and identify improvement opportunities.

    • Consider adding automated messages to the monthly billing statements that give the appearance that accounts are being monitored. These messages include:

      • "Thank you for payment."

      • "Your last payment was made on date. Please send a payment immediately in the enclosed envelope."

      • "Our records do not show payments for the last..."

     

    Collection and/or Demand Letters

    Introduction

    A collection letter is a document used to respond to a specific request.

    A demand letter is a document used to satisfy legal requirements for collection attempts.

    These documents are sent to debtors when:

    • Required by predetermined criteria, e.g., no payment within a specific number of days.

    • Needed to communicate directly with the claimant, e.g., to advise debtor of pending legal action.

    Number of collection letters sent Collection letters are a basic recovery method used by nearly everyone to collect past due accounts. Some SESAs limit the number of letters sent. Other SESAs have an extensive array of letters with virtually no restrictions on the number that can be sent. The number of collection letters in a series should be kept to a minimum so the use of more productive recovery methods are not postponed.
    Guidelines It is recommended that SESAs:

    • Develop criteria for when and how often to send collection letters.

    • Include repayment coupons and return envelopes.

    • Capture data to compare resources expended to dollars recovered as a direct result of collection letters to determine benefit.

    • Ensure more aggressive methods are not postponed due to delays caused by collection letters.

     

    Summary of Guidelines

    Introduction Collection document guidelines are provided for SESA consideration to enhance the recovery of overpaid UI benefits.
    Predetermination notices It is recommended that SESAs:

    • Review and revise the predetermination notice to provide information about paying the potential overpayment.

    • Include a repayment coupon and return envelope.

    • Periodically evaluate the dollars received as a direct result of the predetermination notice to measure effectiveness and identify potential improvement areas.

    Overpayment determinations It is recommended that SESAs:

    • Include the following information in an overpayment determination:

      • The monthly repayment amount, in lieu of payment in full, that is acceptable to the SESA.

      • A statement on repayment.

    • Include a payment coupon and self-addressed return envelope with the overpayment determination.

    • Periodically evaluate the dollars received as a direct result of the overpayment determination to measure effectiveness and identify potential improvement areas.

    • Explore the option of repayment by electronic funds transfer.

    • Avoid the use of accusatory language.

    • Minimize the use of legalistic terminology.

    • Provide clear, concise information written at or below the standard eighth grade level.

    • Contain formatting and font size that improve overall readability of the document.

    Installment agreements It is suggested that SESAs:

    • Encourage repayment by electronic funds transfer.

    • Consider a policy permitting overpaid claimants to liquidate debts on an installment plan based upon the SESAs statutory limitations.

    • Pursue legislation that enables the SESA to report delinquent or untimely debts to credit bureaus.

    • Provide training to staff to develop telephone collection techniques and negotiation skills.

    • Pursue legislation to support assessing a fee to establish and/or re-establish installment payment plans.

    Billing statements It is recommended that SESAs:

    • Develop criteria for when and how long to send billing statements when the debtor does not respond.

    • Provide repayment coupons and return envelope.

    • Periodically evaluate the dollars received as a direct result of the billing statement to measure effectiveness and identify improvement opportunities.

    • Consider adding automated messages to the monthly billing statements that give the appearance that accounts are being monitored. These messages include:

      • "Thank you for payment."

        • "Your last payment was made on date. Please send a payment immediately in the enclosed envelope."

          • "Our records do not show payments for the last..."

    Collection and/or demand letters It is recommended that SESAs:

    • Develop criteria for when and how often to send collection letters.

    • Include repayment coupons and return envelopes.

    • Capture data to compare resources expended to dollars recovered as a direct result of collection letters to determine benefit.

    • Ensure more aggressive methods are not postponed due to delays caused by collection letters.

     

    Footnotes:

    1. Overpayment determinations must also meet each SESAs legal requirements.

    2. Kentucky: Laser Printing - Best Practices, 11/10/97.