350K Michigan Workers Ordered to Repay Covid Jobless Benefits After $2.7B 'Error' — Are You One of Them?

The Unemployment Insurance Agency (UIA) in Michigan said earlier this month that it will resume collections of $2.7 billion (£2 billion) in overpaid claims from around 350,000 workers in the state who received boosted unemployment insurance during the COVID-19 pandemic.

The UIA is offering the impacted workers a two-week grace period and will begin with the recollections on 29th September. If you were offered Michigan unemployment benefits in 2021 and 2022, you could be affected by this development. Michigan workers will be required to repay money they received on claims, dating back to as early as March 2020. The agency said workers who received jobless benefits and were overpaid would have been informed of the situation years ago.

The agency did not collect the overpaid amount until now because many claimants filed a class-action lawsuit in early 2022, alleging that the agency had violated the law by determining that individuals were not eligible for benefits more than a year after they had already been paid. A US court had then stopped the agency from requesting or accepting payments on the debt while the lawsuit progressed. The case was settled in May of this year for $55 million (£40.9 million). As part of the lawsuit closure, a US judge allowed the UIA to lift the pause on collections on 12th September.

'We understand the impact these collections will have on household budgets. That is why we are providing notice and information about applying for a financial hardship waiver,' an agency spokesperson had stated, adding that the UIA is legally obligated to collect back the overpaid benefits. Another UIA official told media outlets that the US Department of Labor requires Michigan and other US states to recover overpayments.

However, workers in the state of Michigan can claim that repaying the benefits to the agency will result in financial strain by filling out a waiver form explaining their financial situation. If the form is accepted, their debt will be cleared. They can start applying for the waiver by navigating to the 'UI Claim' screen in their online unemployment insurance accounts under the 'Claimant Services' tab. Workers can also submit a financial hardship waiver request by submitting the Form 1795 Request to Waive Repayment of Benefit Overpayment Balance.

The agency warned that overpayments won't be waived on claims where there have been findings of fraud, as it continues to "aggressively pursue bad actors who steal money from Michigan taxpayers."

Workers who will be required to repay the money can submit payments via their online unemployment benefits account or by sending cheques or money orders with the 'Form 1088 Payment Voucher' to the Unemployment Insurance Agency-Restitution, Dept. No. 771760, P.O. Box 77000, Detroit, MI 48277-1760.

According to UIA director Jason Palmer, the agency is morally obligated to replenish the state's Unemployment Insurance Trust Fund, which will help laid-off workers in the future.

Remember that those sending a cheque or money order must ensure to note the claim or account number if the payment voucher is not included. The agency will not accept payments in cash, and those who do not repay could face penalties and additional interest on the amount owed, wage garnishment, deductions from tax refunds, or even recoupment from future benefit payments.