How Does Unemployment Compensation Affect Disability Income?

Unemployment compensation recipients often ask me whether their unemployment compensation benefits will count as wages toward their disability earnings when applying for Social Security Disability benefits. Prospective clients also ask whether they can qualify for disability benefits while receiving unemployment benefits at the same time. The short answer to this question is “maybe.” You can review Nolo’s article further explaining the interrelationship between these two types of benefits by clicking here.

According to the Social Security Administration, unemployment compensation recipients can qualify for federal disability benefits, but they may not be able to qualify for unemployment benefits. I know this answer is a little confusing, and it requires an explanation of how both programs work. Click here for an official explanation of the types of benefits administered by the Social Security Administration.

The federal Social Security Administration administers two types of disability assistance programs: the Social Security Disability Insurance (SSDI) program and the Supplemental Security Income (SSI) program. SSDI is based on your employment history and tax contributions, while SSI is need-based. Thus, those who lack the sufficient amount of work credits to qualify for SSDI can apply for SSI benefits. SSI helps low-income and disabled individuals, low-income and elderly individuals and those who are blind and low-income. To qualify for SSI or SSDI, you must be able to prove you have a certified disability that is permanent in nature and expected to lead to your death or last for at least a year, unless you are elderly or blind.

The inherent conflict that exists with Social Security disability benefits and unemployment insurance benefits is that states typically require unemployment insurance recipients to prove that they are looking for work and able to work on a weekly or biweekly basis. However, SSI and SSDI typically is reserved for those who are unable to perform suitable work, in most cases. Under federal law, although the Social Security Administration will not reduce a recipient’s disability benefits by unemployment insurance income, states may prohibit or reduce an applicant’s unemployment insurance benefits by the amount he or she receives as disability benefits. In other words, whether you qualify for both benefits may depend on timing and the order in which you apply for benefits. If you apply for SSI or SSDI before receiving unemployment insurance benefits, you may have a more difficult time collecting unemployment benefits from your state.

By contacting my office, I can go over your options and discuss your alternatives.