Michigan Resumes Collection of Overpaid Unemployment Benefits

News Summary

The Michigan Unemployment Insurance Agency will resume collecting $2.7 billion in overpaid unemployment benefits from about 350,000 residents starting September 29. This follows a temporary pause due to a lawsuit regarding the agency’s collection practices. Claimants are receiving notifications about their outstanding balances and can apply for financial hardship waivers. The UIA stresses the importance of recovering these funds for the state’s unemployment trust fund while providing resources for affected individuals.

Lansing, Michigan – The Michigan Unemployment Insurance Agency (UIA) is set to resume the collection of $2.7 billion in overpaid unemployment benefits affecting approximately 350,000 residents. This process will officially begin on September 29, following a period where collections were paused due to a class action lawsuit against the agency concerning the collection practices for these overpayments.

The lawsuit, which alleged that the UIA unlawfully pursued repayment of these benefits, was settled earlier this year for $55 million. Consequently, a preliminary injunction that had halted collections was lifted on September 12, allowing the UIA to move forward with its plans. According to agency officials, claimants were notified years ago about their outstanding balances and the need to repay these funds.

Beginning September 9, affected individuals received reminders about their overpayments through their accounts in the Michigan Web Account Manager (MiWAM). A subsequent collection notice detailing the amount owed—referred to as Form 1088—will be issued starting September 12. This notice will also provide information on how claimants can apply for a financial hardship waiver to lessen the impact of repayment.

Repayment Procedures

Individuals seeking financial relief from their repayment obligations can submit applications for hardship waivers via their MiWAM accounts or through the use of Form 1795, which is a specific request form for waiver applications. It is important to note that overpayments resulting from fraud or intentional misrepresentation will not be eligible for a waiver, according to the UIA’s established guidelines.

Claimants have the option to make their payments through MiWAM or by mailing checks or money orders to a designated address in Detroit. Those who fail to make timely payments may face penalties, accrued interest, wage garnishments, tax intercepts, or even recoupments from future unemployment benefits. The UIA has implemented a 30-day deadline for claimants to protest their owed amounts, yet they retain the ability to request hardship waivers within this timeframe.

Financial Impact and Responsibility

The UIA recognizes the financial burden that resuming collections may impose on households and emphasizes that they are legally obligated to recover overpaid amounts to maintain the integrity of the unemployment trust fund. Most impacted claimants initially filed for benefits during the peak of the COVID-19 pandemic in 2020 and 2021, at a time when many sought assistance due to sudden job losses and economic uncertainty.

Conclusion

As Michigan resumes collections for overpaid unemployment benefits, the focus is on ensuring that affected individuals are informed about the procedures and options available to them. The UIA continues to provide resources for claimants looking to navigate this repayment process, while also stressing the importance of recovering funds to support the state’s unemployment system.

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