Losing your job through no fault of your own when you have a disability can be a scary experience. There is so much uncertainty, and you may be worried about covering your basic needs.
If you have begun looking into government benefits you are eligible to receive, you may be wondering whether to collect unemployment or apply for disability benefits.
You may also be asking, “Can I get unemployment and disability benefits at the same time?”
This is a very common question that comes up for recently unemployed people who want to apply for disability income. There is a short answer and a long answer to that question, which we’ll be unpacking in this article.
First, let’s clarify exactly how unemployment benefits work.
The Purpose of Unemployment Benefits
To truly understand how unemployment benefits work, it helps to understand the purpose of this government program.
We'll start with a little bit of history.
The federal-state unemployment insurance (UI) system was created under President Franklin D. Roosevelt in the middle of the Great Depression (1929-1939). During this period, consumer spending and investment plummeted following the October 1929 stock market crash, creating a downward economic spiral.
As more and more companies failed, the number of layoffs became massive. The unemployment rate rose from less than 1% in 1929 to a whopping 24.9% by 1933. That percentage doesn’t even count the farmers whose lands and homes were lost to foreclosure.
The unemployment insurance program was part of President Roosevelt’s New Deal, implemented to help stabilize the American economy during the most severe crisis in its history.
The UI program is meant to provide unemployed people with temporary income to provide for basic needs while they seek work.
When this income is spent at businesses such as gas stations, clothing stores, and supermarkets, money circulates back into the economy. Unemployment insurance keeps consumer demand from nosediving despite the instability of financial markets.
By supporting Americans who have lost their jobs, the government is able to ensure relative economic stability.
Again, unemployment insurance is a temporary solution to a (hopefully) temporary problem. The goal is to give beneficiaries the financial leeway to seek another job.
Now that you understand the reasoning behind the UI program, let’s dive into how it works.
How Does Unemployment Insurance Work?
For the most part, the UI system is funded by employers through the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA). There are only three states—Arkansas, New Jersey, and Pennsylvania—in which employees are required to pay a small amount of state UI taxes.
When a person loses his/her job, he/she can apply for UI through the department of employment of the state in which they worked.
Once the application is processed, the employer will receive a notice from the State requiring him/her to either validate or contest the former employee’s unemployment claim. If the claim is invalid (because the worker was fired with cause or voluntarily quit), the employer can contest it.
The claimant does have the right to file an appeal for a denied claim, but the employer also has the right to appeal the State’s determination if he/she disagrees with it. However, if the claim is valid, typically an employer will accept it so that the worker can receive unemployment benefits.
If you are a worker wanting to apply for unemployment benefits, there are three main eligibility criteria to keep in mind:
- You have lost your job through no fault of your own.
- You have earned a certain amount during the “base period” defined by the State.
- You are able to work, available to work, and looking for work.
While some states have waived this last requirement, many states require UI claimants to register for work with the State Employment Service.
If you’re thinking about filing an unemployment claim, be sure to learn more about the eligibility requirements for the state in which you worked. This is important because requirements vary from state to state.
The UI program is meant to give only temporary assistance to workers who have lost their jobs. It is not meant to be a continuous source of income. How much an individual receives in benefits depends on how much they earned during their previous employment.
Generally, the benefit amount is based on a percentage of your earnings over a certain period of time (typically 52 weeks), up to a maximum determined by the State. Again, you should find out about the requirements for your state.
In most states, benefits can be paid for up to 26 weeks. During times of high unemployment—as is the case in an economic downturn—the State may add more weeks to its maximum benefit period.
Finally, keep in mind that you must pay Federal income taxes on your unemployment income. Even though you receive UI from the government, it is still considered as taxable income.
Now that you understand how the program works, let’s turn to how disability benefits differ from unemployment benefits.
What is the Difference Between Disability Benefits and Unemployment Benefits?
The purpose of the Federal disability benefits program is to provide financial assistance to those who are disabled to the point where they cannot engage in substantial gainful activity (SGA).
SGA is any work that provides more than a certain amount of income set by Social Security. The monthly SGA amount in 2022 for non-blind individuals is $1,350. For those who are blind, the amount is almost twice as high.
Technically, you can still work while receiving disability benefits so long as you earn below the SGA amount.
Some level of work can provide those living with a disability meaning and connection. Social Security supports career development for those receiving disability income through the Ticket to Work Program. Still, to receive disability benefits, you must prove that you cannot work a substantial amount.
That said, the essential difference between disability benefits and unemployment benefits is the work requirement.
When you apply for disability income, you are certifying that you are mostly not able to work because of your medical condition. But when you apply for unemployment benefits, you are saying exactly the opposite—that you are able to work.
The other difference between unemployment and disability benefits is who distributes them. UI is distributed via the State, whereas Social Security disability benefits are distributed only by the Federal government.
This means that while the UI requirements vary depending on the state in which you worked, the eligibility requirements for disability benefits are the same across the United States.
Though the work history and income requirements differ between the two disability benefit types, the medical requirements are the same for both. That is, your medical condition must meet Social Security’s definition of disability.
Many people don’t realize that Social Security defines disability in a very specific way.
Their definition of disability is much stricter than you might think. There are detailed requirements for each category of medical conditions in the listing of impairments that must be met in order to qualify for disability benefits.
If you are having difficulties trying to determine whether you qualify for disability, we recommend getting an online disability case evaluation. A case evaluation specialist can help you understand Social Security’s eligibility requirements, whether you qualify, and what your next steps are.
At BenefitsClaim.com, we offer a free online disability case evaluation conducted by trained professionals. There are no up-front costs or fees, and you don’t have to pay a retainer. The disability case evaluation really is free.
To get started, you can take our free 1-minute survey and provide your contact information at the end. One of our team members will get in touch with you about starting your free disability case evaluation.
Another resource we have is our article on how Social Security determines disability. Since we give greater detail about Social Security’s disability evaluation criteria in that article, we encourage you to read it if you wish to better understand how you qualify.
What is most important to know for now is that Social Security pays benefits only for total disability. This means that your medical condition…
- Prevents you from working and engaging in substantial gainful activity (SGA)
- Prevents you from doing any work you did prior to the disabling condition
- Prevents you from adjusting to another type of work
- Is expected to last or has lasted for a minimum of one year or to result in your death
Again, when you apply for disability benefits, you are certifying that you cannot work enough to pay for basic needs.
The amount of disability benefits that you can receive from Social Security depends upon either your level of income and resources (for SSI) or your number of work credits (for SSDI).
What you receive in benefits is really a modest amount. Just to give you an idea, the average monthly Social Security disability benefit was about $1,234 at the beginning of 2019.
Unemployment benefits, though temporary, can come in a greater monthly amount depending on how much you were earning prior to job loss and the state in which you worked.
Unlike UI, you only have to pay federal income taxes on Social Security benefits if you have other substantial income besides your benefits. According to the IRS:
“Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.”
This requirement only applies to those receiving monthly retirement, survivor, and SSDI benefits. If you receive SSI, you will not be required to pay federal income taxes.
Now that you have more background information, we can answer the initial question, “Can I receive unemployment and disability benefits at the same time?”
Receiving Both Unemployment and Disability Benefits
The short answer is, technically, yes. You can collect unemployment and disability benefits at the same time. There is currently no law saying that you can’t do so.
In theory, if you are disabled, were previously engaged in work that is not considered SGA, and then lost your job, it could be possible to collect both unemployment and disability benefits.
Understand, however, that the period in which UI is paid out to beneficiaries is limited.
After the maximum number of weeks, except in rare cases, you would not receive any more UI payments. Your disability benefits would continue, but to recoup the loss of UI without losing your other benefits, you would have to find work that is not SGA.
What is also important to note is that UI counts against the unearned income limit for SSI. Receiving UI could potentially impact your SSI benefit amount. You would also still have to pay federal income taxes on your UI benefits even if you are receiving SSI.
There are no exceptions.
If you are thinking about applying for SSI and unemployment benefits, consider that you may actually receive more benefits from Social Security if you don’t apply for UI. You may end up shortchanging yourself by applying for both. Make sure to weigh your options carefully.
Unemployment benefits do not necessarily affect SSDI, on the other hand. However, applying for both UI and SSDI can be really tricky.
Remember, to apply for disability benefits, you must certify that you largely cannot work. This is opposed to the typical requirement for unemployment insurance, which is that you are able to work and are seeking work.
The work requirements for unemployment and disability benefits directly conflict with one another.
To get your disability claim application approved while collecting unemployment, you must be able to show Social Security why there is no conflict between the two types of benefits.
Honestly, unless you have an experienced disability lawyer to help you make your case, this is really difficult to do. If you decide to apply for both UI and disability benefits, you may want to consult a legal professional.
Getting Disability Benefits Assistance
There is a lot of information to consider when decided what benefits to apply for. Once you actually start the application process, the number of details to keep track of can quickly get overwhelming. Many people make mistakes on their disability claim application that they don’t catch before turning it in.
Unfortunately, that means many applications are denied, even if applicants truly qualify.
The best way to ensure an approval is to have a disability benefits lawyer help you with your application. One of the attorneys on our team can assist you in building a compelling case that is more likely to result in an approval from Social Security.
This is especially true if you want to apply for unemployment and disability benefits at the same time.
You can have peace of mind knowing that someone is walking with you through the whole process, especially if you end up having to appeal a decision.
Begin the process by taking our survey to get a free online disability case evaluation. Your case evaluation specialist will help you determine whether you qualify for disability benefits. If you wish, you can then choose to hire one of our experienced legal professionals to assist you with your disability claim application.
Our mission is to help Americans in need get the benefits they deserve. If you have any questions, you can contact us at email@example.com.