Published on: November 18, 2020
No one wants to risk losing their Social Security benefits, so many Americans applying for or receiving Social Security benefits, whether through Social Security Disability Insurance (SSDI or Supplemental Security Income (SSI) are hesitant to apply for unemployment in the event of a job loss.
Is it true that you will lose benefits? If you’re wondering how can unemployment benefits affect Social Security disability earnings, then DEF is here to answer your questions.
Can Receiving Unemployment Benefits Affect My SSI or SSDI Benefits?
This is not a simple question, since not all Social Security disability benefits are equal. Since SSDI benefits are separate from SSI with different eligibility requirements, they are not equally affected by unemployment earnings.
If you are currently receiving SSDI and apply for unemployment, your SSDI benefits will not be affected. The Social Security Administration (SSA) classifies Unemployment Compensation benefits as "Unearned Income." As the individual receiving these benefits is generally not working, the payments do not affect SSDI benefits.
However, unemployment compensation will affect earnings from SSI payments. As unearned income, unemployment benefit payments reduce SSI dollar for dollar (after exclusion for the first 20.00 in unemployment benefits). Since the current 2021SSI federal monthly payment maximum is $794.00, anyone receiving unemployment benefits over $814.00 will be ineligible for SSI due to excess income.
Will Applying for Social Security Benefits Affect Unemployment?
While unemployment benefits will not affect Social Security payment amounts, unless the payments exceed the SSI maximum, the opposite is true under some circumstances. Funds received through one of Social Security benefit programs may end up reducing a person’s unemployment benefits, depending on the state in which the recipient lives.
Social Security benefits only affect unemployment benefit amounts in the following states: Illinois, Louisiana, Minnesota, and South Dakota (If you’re in Florida, you have nothing to worry about!).
This wasn’t always the case. In the early 2000s, 20 states and the District of Columbia had Social Security offset laws. States began repealing them in 2003 amid advocacy efforts on the issue. The most recent state to do so was Illinois, which repealed its offset law in 2015.
Minnesota still has partial offset laws regarding Social Security and unemployment compensation. For residents who receive both benefits, Minnesota reduces unemployment insurance by half of your Social Security benefits. There are determining factors, such as when you started receiving disability payments and the length of time between filing for Social Security and filing for unemployment.
Learn All You Need To Know About The SSA Disability Application With Our Free Guide!
What Is The Ideal Situation in Which I’d Receive Both Types of Benefits?
An ideal case for receiving both types of benefits is if you are under 62 years of age, currently receiving SSI benefits, and actively pursuing work (not retired or receiving retirement benefits).
Another case in which a person could receive both Social Security benefits and unemployment benefits is if the recipient is disabled to such a degree that they cannot work full-time and receive SSDI benefits, but are still looking for some work to generate income.
Note: SSDI benefits will only continue if a beneficiary’s monthly earnings do not exceed $1,260 per month (2,110 if you're blind) in 2020. Once a beneficiary receiving both types of benefits finds work and makes over that amount - regardless of whether it’s from unemployment insurance or other sources of income - SSDI benefits will be discontinued.
I am Unemployed Due to COVID-19 Cutbacks, Now What?
If you’ve become unemployed due to the economic crisis caused by the COVID-19 pandemic, you can apply for unemployment insurance benefits. Unemployment benefits do not affect or reduce retirement and disability benefits. State unemployment compensation payments are not wages because they are paid due to unemployment rather than employment. However, income from Social Security may reduce your unemployment compensation.
To learn more about receiving unemployment insurance and Social Security benefits at the same time, don’t hesitate to contact the unemployment agency in your state or a local disability advocate group in your area. Or, reach out to any of DEF’S experienced disability advocates! We are here for you and happy to help answer any of your questions.