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Unemployment Insurance Overpayment Waivers

What is an Overpayment Waiver?

The ETA Handbook 401 defines a Waiver as a "non-fraud overpayment for which the state agency, in accordance with state law, officially relinquishes the obligation of the claimant to repay." It further states that a "state may authorize a waiver when or if the overpayment was not the fault of the claimant and requiring repayment would be against equity and good conscience or would otherwise defeat the purpose of the UI law."

States should develop and implement criteria to determine if a waiver is necessary and granted to a claimant. The process of assessing whether to waive an overpayment includes conducting sufficient fact-finding and an eligibility decision on a non-fraud issue. Overpayment waivers directly affect the Recovery Rate, which is an integrity core measure for states. The percentage and dollar amount of a waived overpayment is important for several reasons:

  1. The amount of waivers could artificially inflate this measure since the Recovery Rate is comprised of the established overpayment dollar amount minus the dollar amount of waivers.
  2. The waiver dollar amount could be indicative of excessive administrative error as most states have a requirement that the overpayment must not be the fault of the claimant.
  3. A state may be experiencing system/programming issues where incorrect data is being reported.
  4. The state has an inconsistent or non-existent waiver policy.

The percentage of overpayments waived is calculated using four (4) rolling quarters from the ETA 227-Overpayment Detection and Recovery Activities report (see graph of overpayment waivers levels). The graph shows state level trending data for quarters ending March 2018 to June 2024. Over this period, the National average for overpayments waived fluctuated:

  • Quarters ending March 2018 to March 2022, the average for overpayment waivers was between 2% - 3%.
  • Quarters ending June 2022 and September 2022, the average increased from 5% to 7%.
  • Quarters ending December 2022 to December 2023, the average reached a record high varying between 10% - 13%.
  • Quarter ending March 2024 remained on trend with an average of 11%; however, Quarter ending June 2024 significantly increased to 14%.

The increase in the National average reflects an increase in the number of states issuing waivers for non-fraud overpayments and some states waiving more than half or all non-fraud overpayments established. Over the last few quarters, 21 states were identified as having a high OP rate - 4 out of the 21 states OP rates exceeded 50%. States should not compare the percentage of overpayments waived due to differences across the nation in areas such as: definitions of fraud, criteria for overpayment waivers, total dollar amount of overpayment established, and total dollar amount of overpayment recovered.



Total Dollar Amount UI+EB+EUC Overpayments Waived
US (total of all states) UI+EB+EUC Overpayments Established 		= Nat'l Average of Overpayment Waivers