Can you collect unemployment if you are on social security disability

If you are collecting Social Security benefits and have also recently lost your job due to company layoffs, the coronavirus pandemic, or other factors, you may be wondering if you can collect unemployment benefits on top of your Social Security benefits. The good news is that you can collect both types of benefits at once. These two types of benefits come from completely different sources and receiving one of them does not disqualify you from applying for the other one as well. Read on to learn more.

Receiving Both Unemployment Benefits and Social Security

In most states today, workers can collect unemployment insurance benefits at the same time that they are drawing Social Security. It wasn't always this way, though. In the early 2000s, 20 states plus the District of Columbia had rules stating that if you received both benefits at the same time, then you would have to partially offset your unemployment benefits by as much as 50%. After Illinois repealed this requirement in 2015, Minnesota became the only state left with this provision. 

Minnesota’s offset law currently stipulates that only some residents must reduce their unemployment insurance benefits by up to 50% of their Social Security benefits. The key factors that determine whether this is necessary are the date that the resident began collecting Social Security and the length of time between that date and the date they began collecting unemployment benefits. The Minnesota Department of Revenue website has more information on this. 

How to Apply for Both Programs

If you are eligible to receive both unemployment compensation and Social Security, then you will need to apply separately for each benefit in the same manner as you would if you were only applying for one of them. 

Unemployment insurance is administered at the state level and each state has different rules and processes. The Department of Labor provides contact information and websites for all state unemployment insurance agencies. You should refer to your state's website for the most up-to-date information about how to apply for unemployment benefits. 

Social Security, on the other hand, is a federally funded program operated by the U.S. Social Security Administration. The fastest way to complete your application for Social Security benefits is to do so online.

Keep in mind that you don’t have to wait to begin receiving one benefit before filing for the other. You can file for both benefits at the same time. Also, remember that because each benefit is provided by a different agency, the time frame for receiving payments after you file will vary.

Eligibility Criteria for Unemployment Benefits

If you’ve lost your job for a reason that wasn’t your fault, the foundational criteria for receiving unemployment benefits are fairly straightforward, although specific eligibility criteria does vary from state to state. Without question, you have to be willing and able to work and be actively seeking a job. If you are working a part-time job while seeking full-time employment, you can still usually get at least a partial weekly benefit. The number of hours that you work and the wage that you earn will determine how much in unemployment benefits you qualify for. 

Your work history also plays a major role in determining how much you will get each week and how many weeks you’ll receive benefits. Applicants who have worked for many years at a high-paying job will likely qualify for more benefits than an applicant with a year of full-time work history. 

Recent legislation has also extended unemployment benefits to independent contractors, self-employed workers, and gig workers. This legislation has increased the pool of eligible candidates by several million claimants. There are some cases, in fact, whereby an applicant who would not have qualified for unemployment benefits before could now be eligible for benefits under the rules of the new legislation. 

If you wish to apply for Social Security benefits, you’ll have to meet certain conditions. First, in order to get any kind of monthly benefit, you must have worked for at least 40 full quarters before you retire. A quarter is a three-month period during which you must have earned at least $1,470 (in 2021). Once you have worked 10 years of qualifying quarters, you are eligible to apply for Social Security. 

Second, you must have reached retirement age. This threshold varies depending on the year you were born. If you wait until you reach your full retirement age before collecting your Social Security benefit, you’ll qualify for the full amount of the benefit. If you wish to collect your benefit early, you can apply once you turn 62, but your Social Security benefit will be reduced by 25% for the rest of your life. If you delay collecting your Social Security payments, however, delayed retirement credits could increase the benefit that you’ll receive once you do start collecting. 

As mentioned previously, the state of Minnesota is the only state in the union that currently offsets the unemployment benefits of those who are already receiving Social Security income. If you live in this state, your unemployment benefits may be reduced by an amount equal to half of your Social Security benefits. 

But, collecting unemployment benefits never has any type of impact on the amount of Social Security you receive. If you take Social Security at age 62 and are still working, then your earned income can reduce your Social Security benefit, but because unemployment benefits are considered to be unearned income, there is no impact. 

Other Retirement Payments Impact On Unemployment Compensation

Income that is drawn from a qualified retirement plan, annuity, or IRA can reduce your unemployment compensation in many states. If you are taking distributions from your 401(k) plan or receive a pension every month, this amount may be used to offset your unemployment benefits. 

You’ll need to contact your state’s unemployment office to find out what the rules are for where you live. In some states, your unemployment benefits may be reduced if you have a pension or retirement income. In other states, such as California, retirement income is exempted.

It should also be noted that IRA contributions cannot be made from unemployment benefits, because it is not considered to be earned income by the IRS. 

If you are able to find another job and start working again after filing early for Social Security benefits, your earnings have the potential to reduce your Social Security retirement benefits until you reach full retirement age. If you earn over a certain amount each year, your retirement benefits will be reduced according to a formula found on the Social Security website. Check the website to find out exactly how much you can earn without this happening and how much your benefits will be reduced if you earn more than this amount each year. Once you have reached full retirement age, there is no earnings limit that will lead to a reduction in your benefits. 

Always Check With Your State’s Unemployment Office

The rules that govern unemployment benefits vary by state, so be sure to check with your state’s unemployment office if you have any questions. Because of the increased number of people eligible for unemployment benefits, call centers could be busy and you might find yourself on hold for a long time while trying to reach a representative by phone. You can save yourself some time by finding out if your state provides an email address or a live chat service to answer questions or by seeing if they have a list of Frequently Asked Questions on their website.

Collecting Unemployment and Social Security Disability Benefits Simultaneously

Contrary to what you might think, it is possible to collect Social Security disability insurance (SSDI) and unemployment benefits at the same time. Of course, it is rather difficult to qualify for both of these benefits at the same time because the eligibility criteria are fundamentally at odds. To qualify for unemployment, you must be actively looking for a job. To qualify for a disability claim with SSDI, you must be permanently and totally disabled. Only a small handful of applicants can meet both of these criteria. 

If you receive unemployment benefits, the Social Security Administration will take them into account when they examine your SSDI application. It is your responsibility to prove to the SSA that there’s no conflict between the two benefits.

The same is true for Supplemental Security Income (SSI) benefits, which are paid to disabled persons. While it is theoretically possible to receive this benefit alongside unemployment benefits, the criteria for the two programs are again largely at odds with each other. Unlike receiving Social Security retirement benefits and SSDI, receiving unemployment benefits may reduce your Supplemental Security Income benefit. Claimants should consult with a qualified disability attorney in either of these cases in order to ensure that they are following the rules and receiving every benefit that they qualify for. 

Let’s Summarize...

The bottom line with unemployment benefits is that they bear no relation to Social Security retirement benefits or Social Security Disability benefits except in the state of Minnesota. If you are receiving one of these two benefits and are now contemplating filing for the other, then nothing should stop you from doing so. Consult with your financial advisor for more information on Social Security and unemployment compensation.