Illinois ending debit card payments for unemployment benefits
Illinois is ending its debit card option and going to paper checks for unemployment benefits, unless recipients arrange for direct deposit. The state has yet to address a $5.8 billion deficit in the unemployment fund.
Unemployment benefit recipients will no longer receive assistance payments on debit cards effective Dec. 27, the Illinois Department of Employment Security announced.
The change in payment options comes as the department’s vendor, KeyBank, “made the decision to stop providing debit cards for unemployment insurance benefit purposes,” according to the state agency. KeyBank would not state why it was dropping Illinois.
IDES during the pandemic economic downturn has been plagued by fraud, slow responses to claims and run a deficit in its unemployment insurance trust fund that stands at $5.8 billion. Employers expect to face higher unemployment charges from the state, putting an additional drag on Illinois’ lagging jobs and economic recovery.
After Dec. 27, IDES stated Illinoisans who opted for the debit card method of payment will begin to receive paper checks through a new agency contract with Chase bank. Debit-benefit recipients were “strongly encouraged” to switch to the direct deposit option.
KeyBank debit cards will continue to work, and recipients can access remaining funds until the card expires. IDES administrators said no further payments will be made into the debit card accounts beginning Dec. 27.
A press release did not specify whether IDES is working to find new vendors to reintroduce the debit card payment option.
Since the onset of the COVID-19 pandemic, the number of Americans filing jobless claims nationally has soared to historic highs, placing unprecedented stress on state unemployment systems. Illinois found it was woefully unprepared for the deluge, with antiquated computer systems and a botched introduction of a $22 million fix that immediately exposed the Social Security numbers and other personal information about nearly 32,500 claimants.
Illinois quickly depleted its unemployment insurance fund, leading to a $5.8 billion deficit in the safety net funded by taxes on employers across the state.
The deficit included an initially interest-free $4.2 billion federal loan the state failed to repay by the Sept. 6 deadline. State leaders could replenish the trust fund with federal COVID-19 bailout funds, but instead have tried to repay debt from their past fiscally irresponsible actions.
Illinoisans are now on the hook to pay $60 million in annual interest on the loan.
Unemployed Illinoisans also face benefit cuts or employers face $500 million in automatic tax hikes because federal law mandates the trust fund be replenished. Those tax hikes would further waylay the state’s lagging job recovery.
Instructions on how to switch to direct deposit can be found on the IDES website at ides.illinois.gov/payment.