Bill To Forgive Some Unemployment Overpayment Debt Clears House

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A bipartisan bill that would allow the state to forgive the debt of Kentuckians who were overpaid in state unemployment insurance through no fault of their own passed the state House of Representatives unanimously Tuesday.

If passed, House Bill 468 would allow the Labor Cabinet to waive overpayment debt if the debt wasn’t the fault of the recipient or if collecting the debt would be “contrary to equity and good conscience.”

Kentucky is one of ten states without a statute allowing debt from overpayment of unemployment benefits to be forgiven. 

Republican legislators first announced plans in October to file a bill preventing the state from universally clawing back overpayment debt. The announcement followed a KyCIR investigation which found that Kentuckians who stayed home to self-quarantine at the start of the pandemic were getting billed to repay unemployment benefits, even though Gov. Andy Beshear said they’d be eligible for the money.

The state has made thousands of payments during the pandemic that were later deemed improper, including people who were self-quarantining and substitute teachers who were newly eligible for unemployment benefits.

Beshear sought permission from the federal government last year to waive the debts, but a federal act allowing waivers didn’t apply to Kentucky because the state didn’t have a law on the books allowing it.

The bill will move to the Senate for consideration.