It is easy to make a mistake with your Unemployment Compensation and get overpaid in benefits. The Pennsylvania Labor and Industry will sometimes err on your side and miscalculate your weekly benefit amount. What should do? How can you get overpaid in unemployment benefits? How can you pay back an overpayment? This guide will answer these and other questions you may have if you have to deal with a UC overpayment.

Types of Overpayments

Non-fault overpayments. As their name indicate, these overpayments occur when you get paid benefits you are not entitled to, but without any fault of your own. Generally, this is due to a clerical or computer programming error. When this type of overpayment is spotted by the UIA’s system it gets automatically deducted from your benefits. You will be informed before a deduction takes place and the weekly deduction will never be more than one-third of your weekly benefit amount to avoid excessive hardship on your family budget. However, if the overpayment is less than $100, the deduction will be taken in full regardless of your weekly benefit amount.

If you spot a non-fault overpayment, report it and repay it, to avoid delays and further reductions.

Fault overpayments. As I’m sure you guessed, fault overpayments occur when you try to cheat the system and are caught or you make a mistake in your benefits claim. This can occur if you claim to have more dependents than you actually have, or do not declare earnings from a part-time job while you receive benefits. The PA unemployment agency will require you to pay back fault overpayments with interest. You can repay overpayments voluntarily or they will be deducted from future unemployment benefits or wages, if you are currently employed.

How can I pay back and overpayment?

To repay an overpayment, whether a fault or non-fault overpayment, you can send a check or money order to the Pennsylvania UC Fund. Address the payment to the Office of UC Benefits, Claimant Services, PO Box 67503, Harrisburg, PA 17106-7503. Print your full name, SSN and daytime telephone number on check or money order. Never send cash.

Bounced checks. If you pay an overpayment with a check and it bounces, you will have to pay a dishonored check penalty. The penalty for a dishonored check of $10 or less is $10. The penalty for a check lower than $100 but larger than $10 is the value of the check, while checks larger than a $100 incur in a penalty of $100.

Understanding exactly how much income you will receive will help you prepare a realistic budget you can live with. If you don’t understand the deductions the Pennsylvania Labor and Industry applies on insured unemployed workers, you may be in for a surprise. This article will detail the deductions the Unemployment Insurance agency can apply to your weekly benefit amount.

Blanket reduction in benefits due to a low balance in the Pennsylvania Unemployment Compensation Trust. This Trust funds the state part of the UC program. For more information on this reduction read this article (click here).

Part-Time Income . If your part-time income while receiving unemployment benefits is larger than your partial benefit credit (40 percent of your weekly benefit amount), your weekly benefit amount will be deducted. Click here for a full description of how this deduction is calculated.

Pensions . You will have to deduct some or all of the income you receive from a pension from your unemployment compensation if the pension was setup or contributed to by one of your base-period employers. If only your employer contributed to the pension fund, all of the pension must be deducted from your benefits. If you contributed towards the pension fund, however modestly, only 50 percent is deductible.

There are some exceptions to these rules. For instance, if you did not have the option of receiving periodic payments and received a lump-sum payment then the pension is not deductible. Also if you invest a lump-sum pension payment into an IRA or some other pension fund, it will not be deducted. Finally, if you are receiving Social Security or Railroad retirement funds, you don’t have to worry about deductions.

Back Wage Awards. If you received some kind of back wage award while you received unemployment compensation your eligibility for UC may be jeopardized.

Support Orders. If you have financial obligations, such as child support or some other type of court-ruled payment, it will be deducted from your unemployment compensation. For a full discussion of how support orders are deducted from your weekly benefit rate click here.

Notice that any deduction to your weekly benefit amount will be informed to you before it is made. You can appeal against any deduction you feel is unfair or inaccurate. However, remember you must file an appeal to the UC Board of Review within 15 days of receiving notice of a deduction to your benefits. You have 30 days to appeal against a decision from a UC Board of Review decision.

There is a long-standing myth that you cannot work and claim unemployment benefits. This is of course not true. The government actually encourages unemployed workers to take on any type of work or even work as unpaid volunteers if paid work is not available. The only caveat, of course, is that unemployed workers have to declare any income they receive.

Your local Unemployed Insurance Agency will deduct from your unemployment benefits any income you generate over a certain threshold. This threshold is the partial benefit credit. Any income you make over and above the partial benefit credit is deducted dollar-for-dollar from your unemployment benefits. Once your deduction reaches your weekly benefit amount, you cease to receive unemployment benefits. I guess this is why there is a widespread belief that you can’t work while receiving unemployment benefits. Some might say it is not worth your time to work, if most of it is going to be deducted from your benefits. If your goal is to milk as much as possible from social benefits while working the least as possible, then you would be right. Of course, there are situations, such as single parents of young children or unemployed workers who want to train for an industry in high demand, where working to receive only slightly more than you would get by staying at home does not make much sense.

However, in general working part-time while you receive benefits is a smart choice. It enables you to remain in the labor market, which looks good on your resume and allows you to maintain and build your contact network, which can make finding a full-time job easier.

However, how can you calculate how much you will get in unemployment benefits once you declare your weekly income? No worries, it could hardly be easier to workout.

First calculate your partial benefit credit. In Pennsylvania your partial benefit credit is 40 percent of your weekly benefit rate. So, all you have to do is multiply your weekly benefit amount by 0.4 to calculate your partial benefit credit. For example, if you have a weekly benefit amount of $300 you could earn up to $120 (300 x 0.4) from a part time job without receiving any type of deduction.

What happens though if your make more than your partial benefit credit? As mentioned above, any income over and above your partial benefit credit will be deducted dollar by dollar from your weekly benefit rate.

To calculate how much you will receive if you earn more on your part time job than your partial benefit credit, add your weekly benefit rate and your partial benefit credit and deduct your total weekly earnings from your part time job. So, for example, if you earn $200 on a part time job and your partial benefit credit rate is $120, your benefit amount after deductions would be $300 + $120 – $200 = $220. This would equal a deduction of $80 and a total weekly income of $420.

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