UI Benefit Accuracy Measurement Annual Report Overpayment Rate in Detail
Annual Report Overpayment Rate In Detail
Readers are strongly cautioned that it may be misleading to compare one state's payment accuracy rates with another state's rates. No two states' written laws, regulations, and policies specifying eligibility conditions are identical, and differences in these conditions influence the potential for error. States with stringent or complex provisions tend to have higher improper payment rates than those with simpler, more straightforward provisions.
| State | CY 2005 Overpayment Rate |
Change From CY 2004 (Percentage Pts.) |
Leading Cause (Percent Of UI Benefits Paid) |
|---|---|---|---|
| Kansas | 44.72% | +11.90 | ES Registration (41.58%) |
| Arizona | 34.16% | +3.57 | Work Search (21.35%) |
| Virginia | 25.93% | -0.93 | Work Search (13.70%) |
| Alaska | 21.68% | +8.29 | ES Registration (11.65%) |
| Louisiana | 19.17% | -0.47 | Benefit Year Earnings (6.34%) |
| State | CY 2005 Overpayment Rate |
Change From CY 2004 (Percentage Pts.) |
Leading Cause (Percent Of UI Benefits Paid) |
|---|---|---|---|
| Vermont | 2.84% | +0.04 | Separation Issues (1.00%) |
| Maine | 3.59% | -3.83 | Work Search (1.32%) |
| Kentucky | 3.72% | -1.21 | Benefit Year Earnings (1.45%) |
| Connecticut | 3.94% | -0.83 | Benefit Year Earnings (1.51%) |
| California | 4.66% | -1.50 | Benefit Year Earnings (1.98%) |
| State | Amount of UI Benefits Paid (In Millions) |
CY 2005 OP Rate (Percentage Pt. Change From CY 2004) |
State | Amount of UI Benefits Paid (In Millions) |
CY 2005 OP Rate (Percentage Pt. Change From CY 2004) |
|---|---|---|---|---|---|
| California | $4,744.6 | 4.66% (-1.50) | Michigan | $1,762.5 | 9.28% (-0.24) |
| New York | $2,482.9 | 6.53% (-2.42) | Massachusetts | $1,384.3 | 4.75% (-0.66) |
| Pennsylvania | $2,216.2 | 8.84% (+1.40) | Texas | $1,278.6 | 18.23% (+1.91) |
| Illinois | $1,924.0 | 13.40% (+1.23) | Ohio | $1,195.2 | 18.24% (-0.18) |
| New Jersey | $1,879.7 | 12.61% (+1.32) | Florida* | $731.9 | 5.58% (+0.44) |
*Because Florida suspended sampling for 9 weeks in the aftermath of Hurricane Wilma, the BAM population does not include all of the UI benefits paid during CY 2005. According to the ETA 5159 report, Florida paid $852.2 million in UI benefits in CY 2005.
Note: Rates are the percentage of UI benefits that were overpaid.
Collectively, the ten largest states consistently have had lower annual report overpayment rates than the other states.
Changes in Annual Report Overpayment Rates
The estimated CY 2005 annual report overpayment rate of 9.52 percent of benefits paid in the State UI, UCFE, and UCX programs is a decrease of 0.39 percentage points from the CY 2004 overpayment rate. An estimated $2.98 billion of benefits were overpaid in CY 2005, compared with $3.42 billion overpaid in CY 2004. In CY 2005, 27 State Workforce Agencies reported increases in their overpayment rates from the previous year, and 25 states reported decreases in their overpayment rates.
It is important to note that BAM estimates are based on sample data. Taking into account sampling error, the 95% confidence interval for the CY 2005 estimate is 9.01% to 10.04%. The difference between the CY 2004 and CY 2005 annual report overpayment rates is not statistically significant, and the changes in the cause component overpayment rates are less than the variation attributable to sampling.
| Overpayment Cause | CY 2005 Percentage of UI Benefits Paid |
Percentage Point Change From CY 2004 |
|---|---|---|
| Benefit Year Earnings | 2.80% | +0.04 |
| Separation Issues | 2.15% | +0.09 |
| Work Search | 1.37% | -0.18 |
| ES Registration Issues | 0.89% | -0.09 |
| Base Period Wage Issues | 0.74% | +0.13 |
| Able & Available | 0.52% | -0.13 |
| Other Eligibility Issues* | 0.38% | -0.08 |
| Dependents and Other Issues+ | 0.67% | +0.18 |
* Includes work refusals, self-employment, and illegal alien status.
+ Includes reductions in payments due to severance and vacation pay, Social Security and pension income, back pay awards, redeterminations, and payments made during a period of disqualification.
| State | Percentage Point Increase From CY 2004 |
Leading Cause of Increase (Percentage Point Increase) |
|---|---|---|
| Kansas | 11.90 | ES Registration (+13.48) |
| Alaska | 8.29 | ES Registration (+4.26) |
| Hawai'i | 4.09 | ES Registration (+1.46) Work Search (+1.10) |
| Arizona | 3.57 | Work Search (+3.77) |
| Puerto Rico | 3.51 | Benefit Year Earnings (+2.61) |
| State | Percentage Point Decrease From CY 2004 |
Leading Cause of Decrease (Percentage Point Decrease) |
|---|---|---|
| Wisconsin | -4.21 | Work Search (-3.94) |
| Maine | -3.83 | Work Search (-3.76) |
| Iowa | -3.52 | Benefit Year Earnings (-0.97) Other Issues (-0.85) |
| Delaware | -2.90 | Benefit Year Earnings (-1.13) |
| Utah | -2.88 | Base Period Wage Issues (-1.37) |
Overpayment Cause and Responsibility
Causes of Overpayments in CY 2005
The leading cause of overpayment errors in CY 2005 was unreported or erroneously reported benefit year earnings (BYE), which accounted for nearly 30 percent of the approximately $3 billion overpaid and 2.8 percent of the $31.3 billion in UI benefits paid in CY 2005. Separation issues were the second leading cause of overpayments, accounting for nearly 23 percent of the amount overpaid and 2.2 percent of benefits paid.
Leading Cause of Overpayments by State
BYE issues were the leading cause of overpayment errors in 26 of the states. Work search and separation issues were the leading cause in 10 states each. Employment service registration issues were the leading cause of overpayments in five states.
Overpayment Cause Trends
BYE issues account for the largest proportion of overpayments. In CY 2005 the percentage of UI benefits that were overpaid due to BYE issues was unchanged, and separation issues, which are the second leading cause of overpayments were essentially unchanged. The "Other" category, which includes reductions in payments due to severance and vacation pay, Social Security and pension income, back pay awards, redeterminations, payments made during a period of disqualification, and dependents issues, decreased slightly in CY 2005. The remaining categories were essentially unchanged.
Responsibility for Overpayments in CY 2005
Claimants alone were responsible for nearly 60 percent of the dollars overpaid; claimant responsibility accounted for overpayments representing 5.7 percent of total UI benefits paid in CY 2005. Errors resulting in overpayments that were attributed exclusively to the state agency accounted for 14 percent of the amount overpaid and represented 1.3 percent of the UI benefits paid. The claimant and agency shared responsibility for an additional 10 percent of the overpayments. The category "All Other" includes overpayments for which more than one party has responsibility, such as agency and employers, as well as third parties.
The following chart displays the overpayment responsibility of the major responsibility classifications for the period CY 2000 to 2005.
Average Amount Overpaid and Workload Measures
Another approach to measuring UI benefit payment integrity is to examine the average amount overpaid. Average overpayments can be expressed either in terms of the number of erroneous payments or in reference to a workload measure.
To identify an appropriate workload measure, overpayment errors are classified by cause: monetary (base period wage and dependents allowance issues), separation (voluntary quit and discharge), and nonseparation (benefit year earnings and income, able and available, work search, ES registration, refusal of work, alien status, and other continuing eligibility issues). The workload measure relates to points in the UI claims process at which an overpayment error can occur. For example, the state agency must determine that the claimant is monetarily eligible for benefits and that no disqualifying separation issue exists before a week of UI benefits can be claimed. Nonseparation issues relate to the claimant's eligibility to receive benefits for continued weeks of unemployment compensation claimed. Workload measures are summarized in the following table.
| Cause | Workload Measure | CY 2005 |
|---|---|---|
| Monetary | Number of first payments | 8,036,892 |
| Separation | Number of first payments + Number of additional claims (ACs), excluding ACs for which a nonmonetary determination resulted in a denial | 13,370,355 |
| Nonseparation | Number of UI weeks paid | 123,750,967 |
Monetary overpayments average approximately $36 per erroneous payment. These errors generally represent a reduction of the claimant's weekly benefit amount due to erroneously reported or recorded base period wages. However, most of these claimants remain eligible for some UI benefits. In contrast, separation overpayments often involve complete disqualification (due mostly to voluntary quits and discharges), resulting in an average overpayment of $208 per erroneous payment. Nonseparation errors average $162 per overpayment and encompass several issues. Some of these, such as able and available and work search violations, result in total disqualification for the compensated week of unemployment, whereas other issues, such as earnings from part-time employment or income from social security or pensions result in a partial reduction of benefits for the week of unemployment that is affected.
Workload averages place overpayments in the context of the number of transactions and eligibility determinations made in the UI system. The average overpayments per workload are computed by dividing the amount of benefits overpaid in each cause category by the appropriate workload measure. For example, BAM estimates that approximately $253 million were overpaid due to monetary issues. Dividing this amount by the 8,036,892 first payments results in an average overpayment of approximately $31. Average overpayments per workload measure for separation and nonseparation errors are significantly smaller than the average amount per overpayment. For example, dividing total overpayments due to separation issues ($674.5 million) by the 13.4 million first payments and eligible additional claims* produces an average overpayment of $50. Nonseparation overpayments, which comprise issues related to the claimant's continued eligibility during his or her benefit year (for example, benefit year earnings, able and available, and work search issues) totaled nearly $2.1 billion, an average of $17 per UI week paid.
* Additional claims are filed when a claimant returns to work during the benefit year before exhausting the maximum amount of UI benefits to which he or she is entitled, is separated from that employment, and files a claim for additional weeks of unemployment. The agency determines eligibility based on the circumstances of the claimant’s separation from the intervening employment.
Prepared by:
U. S. Department of Labor
Employment and Training Administration
Office of Workforce Security
Division of Performance Management
July 2006