Do You Have to Repay Unemployment Benefits?

Unemployment benefits are designed to help people who aren't working have some financial security until they are employed again. For the most part, these benefits do not have to be repaid. Under certain conditions, however, a state or federal agency might determine that some of the benefits should not have been paid. At that time, there might be a requirement to pay back some of the unemployment benefits.

Funding

One misconception that some people have is believing unemployment is funded from individual taxpayers. This is definitely not the case. Unemployment is funded by the employer when income tax is collected. This money is put into a fund set up by the Federal Unemployment Tax Act. States can also borrow money out of the fund. Most mistakes made relating to unemployment come on the part of the employer, rather than on the employee receiving unemployment benefits.

Overpayment

There are times when an individual might have to pay back some of the unemployment benefits he received. Despite the best efforts of the system, there are times when mistakes are made. Sometimes, the mistakes are on the part of the applicant and sometimes the mistakes are on the part of the unemployment agency. Regardless of who made the mistake, if the individual has received too much unemployment payment, he will have to pay it back upon being notified by the unemployment agency.

Issues

Another time that an individual might have to pay back unemployment benefits is if benefits were provided but issues developed later on. Individuals can collect unemployment benefits while an employer disputes whether or not claims should be paid. The Department of Labor investigates the claim. If it decides to side with the employ(Reference 3)

Changing Conditions

A person collecting unemployment benefits might have conditions change that can affect whether or not he should paid unemployment or if the payment amount should be adjusted. For example, in some cases, if a person is collecting workers' compensation at the same time he is collecting unemployment insurance, the unemployment office needs to be notified immediately. Otherwise, there could be a repayment request in the future.

Payment Plans

In the event that a person has to pay back his unemployment benefits, the money must be paid back as soon as possible. If he doesn't have all the money right away, he can set up a payment plan with the unemployment office.