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Monday, June 17, 2013

Overpayment Of Unemployment Due To Payment of Workers’ Compensation Benefits – NOW WHAT?!?

Today's post comes from guest author Kit Case from Causey Law Firm.

Injured workers transition from time loss compensation under their workers’ compensation claim to unemployment compensation when they are released to return to work but do not have a job available to them. In many cases, disputes arise as to whether the release to work and termination of workers’ compensation payments is appropriate. Often, the worker tries to find physically-appropriate work while collecting unemployment compensation during the dispute process but, once their attorney secures payment of back benefits under the workers’ compensation claim, an overpayment of unemployment benefits has occurred due to the overlap between the two systems. When this happens, workers should:
  1. Notify the unemployment insurance system that they are continuing to seek payment from the workers’ compensation system, but that they are involved in an appropriate job search during the dispute process.
  2. Immediately share with the workers’ compensation attorney any notices or orders received from the unemployment insurance system. These are usually NOT mailed to the attorney of record in a workers’ compensation claim and the notices often have limited time periods within to file a protest or request for reconsideration of the determination.
  3. Hold in savings from the workers’ compensation payment the claimed unemployment overpayment amount during the dispute process until a final overpayment notice has been issued, or have the workers’ compensation attorney hold this amount in their trust account. If this is not possible, be prepared to enter into a repayment agreement with the unemployment insurance system once a final overpayment figure has been determined.
  4. Seek assistance from the workers’ compensation attorney to document all attorney fees and costs paid as part of the effort to obtain back benefits under the workers’ compensation claim. Submit this documentation to the unemployment insurance system and request a reduction in the claimed overpayment to take these attorney fees and costs into account.
  5. Continue to send any notices or orders to the workers’ compensation attorney.
  6. Once the overpayment has been repaid, check to see if the receipt of workers’ compensation back benefits changes your tax obligations. In many states, workers’ compensation payments are not taxable income, but unemployment benefits are taxable. If there is a significant payment of back benefits under the workers’ compensation claim, it may be worthwhile to file an amended tax return with the IRS to document the lower taxable income figure.
Read more about "benefits" and workers' compensation:
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