The Congressional Research Service is out with a report on the concurrent receipt of Social Security disability benefits and unemployment insurance benefits. The report is superficial but it does contain an estimate from Social Security's Chief Actuary that only about 0.39% of Social Security disability recipients also receive unemployment benefits. In other words, it's a tiny problem. Doing something about it wouldn't save much money.
The report doesn't deal with the considerable technical problems in implementing an offset. Many states now have an offset that goes in the opposite direction, reducing unemployment insurance for Social Security disability benefits. How do you avoid a double offset? Similarly, Supplemental Security Income (SSI) benefits are already reduced for the receipt of unemployment benefits. Many people receive both SSI and Disability Insurance Benefits (DIB). Add an offset to DIB and you're doubly offsetting the same benefits. And there's the tax issue. Yes, the tax issue. Unemployment benefits are fully taxable. Social Security disability benefits usually aren't. If you have an offset that goes one way in some states and another one in other states, you have to add a provision to the Internal Revenue Code to equalize treatment. You say that you can't imagine that kind of provision in the Internal Revenue Code? Well, we already have such a provision in the Internal Revenue Code to equalize treatment between states that have a regular workers compensation offset and those which have a reverse offset. Here's I.R.C. 86(d)(3), for your reading pleasure:
The report doesn't deal with the considerable technical problems in implementing an offset. Many states now have an offset that goes in the opposite direction, reducing unemployment insurance for Social Security disability benefits. How do you avoid a double offset? Similarly, Supplemental Security Income (SSI) benefits are already reduced for the receipt of unemployment benefits. Many people receive both SSI and Disability Insurance Benefits (DIB). Add an offset to DIB and you're doubly offsetting the same benefits. And there's the tax issue. Yes, the tax issue. Unemployment benefits are fully taxable. Social Security disability benefits usually aren't. If you have an offset that goes one way in some states and another one in other states, you have to add a provision to the Internal Revenue Code to equalize treatment. You say that you can't imagine that kind of provision in the Internal Revenue Code? Well, we already have such a provision in the Internal Revenue Code to equalize treatment between states that have a regular workers compensation offset and those which have a reverse offset. Here's I.R.C. 86(d)(3), for your reading pleasure:
For purposes of this section, if, by reason of section 224 of the Social Security Act (or by reason of section 3(a)(1) of the Railroad Retirement Act of 1974), any social security benefit is reduced by reason of the receipt of a benefit under a workmen’s compensation act, the term “social security benefit” includes that portion of such benefit received under the workmen’s compensation act which equals such reduction.
Overall, it's questionable whether this sort of offset would even save money once you factor in the costs of administration. It's got superficial appeal but it's a dumb idea in my opinion.
about 0.39% of Social Security disability recipients also receive unemployment benefits. In other words, it's a tiny problem. Doing something about it wouldn't save much money.
ReplyDeletehahahahahahah
With close to 11 million people on disability benefits, 0.39% would be about 43,000 people. That would be a decent chunk of change with an offset.
ReplyDeleteI'm actually impressed that the report author caught some (but not all) of the good arguments for not instituting the UI offset at all:
ReplyDelete-discourages workers with disablities from attempting work
-SSA's substantial gainful work disability standard does not always conflict with many state UI work certification requirements
-People who pay into both programs and qualify for both should get both and not have their pocket picked by Uncle Sam
-The benefits are typically very modest, and people with disabilities are typically in great need.
Surely there is a better way for the government to raise money other than making poor people with disabilities suffer.
"Many states now have an offset that goes in the opposite direction, reducing unemployment insurance for Social Security disability benefits."
ReplyDeleteWhich states offset UI for DI?
@8:58 P.P.
ReplyDeleteWisconsin just passed one last legislative session.
Wisconsin prevents people from receiving both benefits...that's not the same as an offset
ReplyDelete@ 9:38
ReplyDeleteYeah, the Wisconsin rule as described above is more harsh on people with disabilities. If someone has a low SSD rate and would qualify for a much higher UI rate, then the person loses all of the higher UI benefit. The offset is the lesser of the two evils as only part is lost.
What bothers me about these proposed benefit offsets and cuts is that a sector of the taxpaying public that already faces a lot of adversity (workers with serious disabilities) would keep paying the same amounts into the SSI and UI systems, and then get less benefits at the time they need them most.
What happens when these people can no longer pay their rent and basic necessities and become homeless because of these "offsets?" They are then unlikely to get decent jobs. In many cases their medical conditions worsen, and they end up costing the system far more. These proposed offsets and cuts are penny wise and pound foolish.