Can I Apply for Disability While Collecting Unemployment Benefits?

If you were let go or laid off from your job, it makes sense to start collecting unemployment benefits, even if you were having trouble working full-time due to health issues. But you know unemployment benefits won't last forever. If you don't think you'll be able to go back to work at a new job, you might be wondering if you can apply for Social Security disability benefits.

Can You Apply for Disability While on Unemployment?

Officially, the Social Security Administration (SSA) says that collecting unemployment benefits, on its own, doesn't prevent you from being approved for disability benefits. But collecting unemployment benefits is a factor that administrative law judges can consider when they're deciding your disability case.

It can be a problem to collect unemployment benefits while you're applying for Social Security disability benefits because when you file for unemployment, you are saying you are willing and able to work—but when you file for disability, you are saying that you can't work at all for at least a year. Because these statements are at odds with each other, some judges will be skeptical about your disability claim if you're filing for unemployment at the same time.

Will Social Security Know If I'm Collecting Unemployment?

Disability claims examiners and judges usually know when you're collecting unemployment benefits because Social Security has access to unemployment benefits information. If you're collecting unemployment, the SSA will usually include that information in your claims file.

What Do Disability Judges Think About Collecting Unemployment?

Not all disability judges will automatically deny you benefits if you're collecting unemployment. Judges typically call into four categories on the topic:

• Some judges don't like to see that disability applicants are collecting unemployment benefits, no matter what the circumstance.
• Other judges will deny your disability claim only if you received unemployment after you applied for disability benefits, unless you can prove your condition medically worsened since you applied for unemployment benefits.
• Other judges simply will not pay you disability benefits for the time period that you were receiving unemployment, and may ask you to "amend" (change) your disability onset date so that your disability payments start after your unemployment benefits ended.
• Still other judges don't care even if you're receiving unemployment benefits at the time of your hearing. These judges realize that people need income to live on, and that there is no guarantee that someone will receive disability benefits after the long process of applying for benefits.

Judges who are stricter about collecting unemployment benefits while applying for disability are more likely to issue an unfavorable decision or an only partially favorable decision.

If I Can Only Work Part-Time, Can I Collect Unemployment and Apply for Disability?

In a few states (such as Texas and Georgia), you can only apply for unemployment benefits if you're ready and willing to work full-time. But in many states, you can collect unemployment benefits even if you're only looking for part-time work. In these states, when you apply for unemployment benefits, you're not necessarily telling the employment department that you're available to work full-time.

And applicants for Social Security disability aren't necessarily saying that they can't do part-time work—only that they can't earn money at a level the SSA considers to be substantial gainful activity. (In fact, disability applicants are allowed to work a limited amount of time.) So, depending on your state, you might not be saying conflicting things by trying to collect unemployment and Social Security benefits at the same time.

Will a Judge Ask About Unemployment Benefits at My Hearing?

It's likely that if you've collected unemployment benefits and you attend an appeal hearing, the disability judge will want to know why you're collecting unemployment benefits (or why you collected them until recently).

The judge may ask what jobs you applied for while you were collecting unemployment (and will be checking if they were similar to your old job). If the jobs you applied for were ones that you've said you aren't capable of doing—for example, a job requiring heavy lifting—you may have a problem. If you're in this situation, you might want to offer to change your alleged onset date to a date after you stopped collecting unemployment benefits.

Likewise, if you applied for a full-time desk job while you were collecting unemployment but you're now telling the judge you can't do any full-time work, the judge might not believe you. You could argue that you probably wouldn't have been able to sustain full-time work for more than a few weeks without significant pain or without getting fired due to absenteeism caused by your disability. Depending on the judge, your explanation might be acceptable.

How Can I Explain Why It Made Sense for Me to Apply for Disability While on Unemployment?

If the judge asks you what jobs you applied for while you were collecting unemployment benefits, you might have a valid argument that collecting unemployment benefits and disability benefits at the same time didn't create a conflict in your situation. Here are some examples of successful explanations:

• You applied for jobs that were within your physical or mental limitations (for example, no heavy work, fast-paced jobs, or high-stress jobs dealing with the public).
• You applied only for part-time jobs.
• You applied to jobs where you might have been able to work if the employer had agreed to accommodate your disability—perhaps by providing special equipment or letting you have a flexible schedule—even though the accommodations might not be considered reasonable for most companies.
• You're 55 or older and you only applied for "light" work, since that's all you can do. In this case, the fact that you can do light work might not hurt your disability claim. Thanks to a special "grid rule" for applicants who are at least 55 and limited to light work, you will qualify for disability unless the judge thinks you have transferable skills, recent relevant job training, or you can still return to your old job.
• You're 50 or older and you applied only for sit-down ("sedentary") jobs, since that's all you can do. In this case, the fact that you can do sit-down work might not hurt your disability claim. Again, thanks to a grid rule for applicants who are at least 50 and older and limited to sedentary work, you should be found disabled unless the judge thinks you have transferable skills, recent relevant job training, or you can do your old job.

The main thing to keep in mind is that Social Security's definition of disability isn't necessarily incompatible with receiving unemployment benefits. Many claimants have applied for unemployment benefits believing they can return to work only to find that they overestimated their own abilities. Few judges will penalize claimants for misjudging their work capabilities.

Can You Collect Unemployment and Long-Term Disability Benefits at the Same Time?

Because of the way long-term disability (LTD) and unemployment insurance programs are structured, people rarely receive these benefits at the same time. However, the eligibility requirements for LTD and unemployment benefits do occasionally overlap, so you can collect both in limited circumstances.

What's the Difference Between Unemployment Benefits and LTD Benefits?

Unemployment benefits are generally administered by a state agency. They're intended for people who are ready, willing, and able to work, but have lost a job through no fault of their own. Long-term disability benefits, on the other hand, are provided by a private insurer and are meant for people who aren't able to work due to illness or injury. As with Social Security disability benefits, the issue with collecting unemployment and LTD at the same time is that you may be contradicting yourself by saying both that you're ready to work and that you're unable to work.

That means that LTD insurance plan administrators won't hesitate to use an application for unemployment benefits against you, taking your unemployment application as evidence that you think you can work or dismissing your credibility. Your state's unemployment agency may make similar assumptions if it discovers you've filed an LTD claim—namely that you're not "ready, willing, and able" to work and therefore don't qualify for benefits. So the agency is likely to deny your claim for unemployment benefits if it finds out you're collecting LTD disability benefits.

Exception for "Own Occupation" Policies

If you have an "own occupation" LTD policy, you may be eligible for unemployment benefits if you were let go from your job. Own occupation LTD policies define disability broadly, as the "inability to perform the material duties of your own occupation due to illness or injury." For example, a firefighter who is no longer able to climb ladders following a knee surgery may be eligible for LTD benefits under an own occupation policy even if they could work in a less strenuous position.

Own occupation policies are contrasted with "any occupation" policies, which only pay disability if you're "unable to perform the duties of any occupation in the economy for which you are reasonably fitted based on your education, training, and experience." Many disability policies that start off as "own occupation" shift to "any occupation" after a certain timeframe, usually 24 months. (If you aren't sure what kind you have, check your policy's Summary Plan Description.)

So if you're receiving LTD benefits under an "own occupation" policy—or during the first 24 months of a hybrid policy)—you might be able to show that you're "ready, willing, and able" to perform some type of work, even though you can't do your previous job. In this case, you could collect LTD benefits and unemployment benefits at the same time. Still, your state unemployment agency may deny you benefits if it determines that you've stopped working "voluntarily and without good cause," a standard that varies from one state to the next. The agency may contact your employer to ask about the nature of your work separation.

If your LTD policy provides for "partial" disability benefits, your chances of receiving both LTD and unemployment benefits might be higher. That's because your state unemployment agency is less likely to use your receipt of partial LTD benefits against you, since it's highly possible that you could be "partially disabled" (that is, unable to substantially maintain your previous earnings) but still be able and available to do other kinds of jobs.

Do Insurance Companies Offset Long-Term Disability for Unemployment Benefits?

Most long-term disability policies contain LTD offsets for "other income benefits," such as Social Security payments, workers' compensation, third-party settlements, and unemployment benefits. So if you're receiving both LTD and unemployment payments, it's likely that your LTD insurer will be able to deduct the amount of your unemployment check from your monthly LTD check. For example, if you're getting $1,400 per month in LTD and you're approved for $1,000 each month in unemployment, the LTD insurer would pay a reduced benefit of $400 for as long as you're receiving $1,000 per month in unemployment benefits.

So, Should You Apply for Disability or Wait?

Broadly speaking, it's risky to apply for Social Security disability while collecting unemployment benefits. The SSA is aware of damaging stereotypes about the disability system, and most judges prefer to see that you've exhausted all available resources before you apply for benefits. That said, judges also know that the wait for disability benefits is quite lengthy (it's not uncommon to take several years for a claim to be resolved) while unemployment benefits are more immediate—which can provide a needed lifeline if you're in financial trouble.

Every situation is different, however, and there's no one-size-fits-all answer. If you're collecting unemployment but aren't sure whether you're really able to return to full-time work, consider talking about your circumstances with an experienced disability lawyer. An attorney can review your work history and medical records to advise you on the best course of action. Lawyers in your area are also likely to be familiar with the local disability judges, so if you already have a hearing scheduled, they'll know the most persuasive arguments to make when discussing why collecting unemployment doesn't mean you aren't disabled.