Jobless aid programs get a facelift under a bipartisan Senate proposal

The top Democrat and Republican on the Senate Finance Committee introduced a bipartisan proposal Wednesday meant to address fraud and improve access to unemployment insurance.

“The Covid-19 pandemic showed that unemployment insurance systems were too often unable to keep up with the needs of American workers and too vulnerable to fraud,” said Sens. Mike Crapo, R-Idaho, and Ron Wyden, D-Ore. in a statement. 

The Unemployment Insurance Integrity and Accessibility Act, which also boasts 10 cosponsors, includes provisions meant to help states combat fraud, which spiked during the pandemic, as well as make sure that those eligible for benefits are able to claim them.

The bill proposes to extend the statute of limitations for fraud in pandemic-era jobless aid programs from five to 10 years, a move that would fulfill an ask from the oversight community. 

The bill would also allow states to waive the collection of certain overpayments that weren’t attributable to fraud and retain a cut of recovered overpayments to put back into their systems to administer jobless aid. 

The proposal also includes a number of data-matching requirements for states, including that they check a registry of new hires to make sure that an applicant isn’t working while getting jobless aid.

The Labor Department’s watchdog has estimated that $191 billion of the more than $888 billion total pandemic unemployment spending was paid improperly, with much of that being attributable to fraud.

Among the causes were weak controls in some of the pandemic-era programs stood up to cover more types of workers, old tech systems, understaffing and underfunding in states delivering benefits. Many fraudsters used identity theft to go after benefits. 

In addition to problems with fraud, many states also struggled to get aid out quickly — and many claimants continue to see long timelines to get their benefits, unemployment insurance expert Michele Evermore has written.

The share of unemployed workers who actually get benefits has also been going down for years, with disparities among claimants based on race, ethnicity, age and education. The Labor Department called on states to make sure that they remove barriers to getting the benefit in guidance last fall.

Wyden and Crapo’s bill would codify several proposals meant to increase access to the program, including that the process is accessible for people with disabilities and for people who speak a language other than English or have low literacy. 

Other requirements include ensuring that online systems are mobile-friendly and enabling online submission of necessary documents. The bill would also require that states offer an in-person option for filing. 

The bill’s introduction follows the release of a framework on the same topic from the same pair in February, which got praise from Gene Sperling, the White House’s senior advisor and American Rescue Plan coordinator. 

House Republicans have also pitched their own proposal aimed at fraud in the jobless aid system, although it faced pushback from Democrats over clawback provisions for American Rescue Plan Act funds invested in the system. Last year’s debt ceiling deal did cut back $1 billion in ARPA money for unemployment. 

The House proposal passed the lower chamber in May and has a Senate counterpart from Crapo, which he introduced the same month.