UPDATE (18 Sept. 2021): It turns out that I misread the number of SSDI recipients who work from the data sets referenced below that the Social Security Administration makes available. The numbers being ascribed to SSDI recipients working part-time below in the original post do NOT actually exist. Instead, those numbers refer to SSDI recipients who qualify for SSDI benefits in a particular year because of their prior work history and do not indicate one way or the other how many SSDI recipients are working part-time.
So, this means that there are NOT 150,000 and more SSDI recipients working in Wisconsin right now who are cut off from receiving regular unemployment benefits by Wisconsin’s eligibility ban or the revised financial offset that was originally proposed and was recently re-proposed by Governor Evers. Some number of Wisconsin residents who are disabled and receiving SSDI are working part-time jobs. That exact number is not available at the moment.
What we do know and which remains unchanged is that thousands of disabled people in Wisconsin continue to work after they start receiving SSDI benefits, and the eligibility ban prevents them from receiving any unemployment benefits when they lose jobs that have nothing to do with the SSDI eligibility. The original post follows.
For those with dyslexia, my apologies. But, in 2021 Wisconsin is actually returning to what happened in 2012. That is, Gov. Evers’ 2021 budget proposal seeks to return Wisconsin to the original 2012 SSDI eligibility ban for receiving unemployment benefits.
Here is the story of how disabled workers in Wisconsin continue to get the short end of the stick.
The original eligibility ban, dressed up as a financial offset
In November 2012, the Department introduced proposal D12-05, which stated in relevant part:
2. Create 108.05(7g) Social Security benefits.
(a) If a claimant is receiving, has received, or has filed for primary Social Security disability benefits for a particular week it creates a rebuttable presumption that the claimant is unavailable for suitable employment for that week, unless the claimant provides, on a Department form, a statement from an appropriate licensed health care professional who is aware of the claimant’s Social Security disability claim and the basis for that claim, certifying that the claimant is available for suitable employment. If the claimant provides a statement to overcome the rebuttable presumption, the claimant is still considered unavailable for suitable work unless the claimant earned base period wages under s. 108.06 (1) while receiving or having filed for primary Social Security disability benefits.
(b) Information from the Social Security Administration is considered conclusive, absent specific evidence showing that the information was erroneous.
3. Reason for the Amendments
Roughly 117,000 Americans double-dipped by cashing unemployment and Social Security disability checks, costing taxpayers a combined $856 million in fiscal year 2010, according to the Government Accountability Office. Nationwide the cash benefits they received totaled over $281 million from DI and more than $575 million from UI.
To understand why such “double-dipping” may constitute fraud, please note the following general requirements for each program:
⏺ To receive unemployment insurance benefit payments, claimants must state that they are able to work.
⏺ To receive disability insurance benefit payments, claimants must state that they are unable to work.
Under certain circumstances, it is possible that some individuals may be eligible for concurrent cash benefit payments due to differences in DI and UI eligibility requirements. Differences in program rules and definitions allow individuals in certain circumstances to receive overlapping DI and UI benefits without violating eligibility requirements. The Social Security Administration’s definition of a disability involves work that does not rise to the level of substantial gainful activity. In contrast, a state’s determination of “able and available for work” criteria for UI benefits may include performing work that does not rise to the level of substantial gainful activity. As a result, some individuals may have a disability under federal law but still be able and available for work under state law, thus eligible to receive DI and UI.
Footnote: A number of reviewing federal courts have held that a Social Security disability claimant’s acceptance of state unemployment compensation does not, in and of itself, prove an ability to work. See, e.g., Lackey v. Celebrezze, 349 F.2d 76, 79 (4th Cir. 1965) (claimant entitled to disability benefits where no showing made that claimant actually represented to state authorities that he was able to work or that he was aware of legal requirements for unemployment compensation); Kinsella v. Schweiker, 708 F.2d 1058, 1066 (6th Cir. 1983) (Swygert, J., dissenting) (noting that the mere receipt of unemployment insurance benefits does not prove ability to work); Roberts v. Callahan, 971 F.Supp. 498 (D.N.M. 1997) (although claimant had to state she was willing to work and that she applied for some jobs in order to receive unemployment benefits, case remanded to reconsider credibility determination); Alverio v. Chater, 902 F. Supp. 909, 928 (N.D. lowa 1995) (finding that claimant’s simultaneous receipt of unemployment insurance benefits and application for social security disability benefits did not negate her claim of disability or indicate substantial evidence of her lack of credibility); Riley v. Heckler, 585 F.Supp. 278 (S.D. Ohio 1984) (claimant entitled to award of past due disability benefits despite receiving state unemployment benefits); Flores v. Dep’t of Health, Educ. and Welfare, 465 F.Supp. 317, 322 (S.D.N.Y. 1978) (record showing that administrative law judge relied almost exclusively on claimant’s receipt of unemployment benefits failed to sustain denial of claim, but rather established that claimant made prima facie showing that he was unable to work at his former occupation).
Yet, many of individuals currently receiving both unemployment insurance benefit payments and disability insurance payments do not fall within that narrow category and are therefore committing acts of fraud. In general, legitimate beneficiaries of these social safety net programs can draw funds from one program, or the other, but not both at the same time.
Unemployment insurance benefits are not counted under the Social Security annual earnings test and therefore do not affect an individual’s receipt of Social Security benefits. Yet, federal law does allow that the unemployment benefit amount of an individual to be reduced by the receipt social security disability insurance benefits.
D12-05 at 1-3 (emphasis in original, except in last paragraph where emphasis added).
As explained to the council at the time: “the proposal was developed after review of the laws of a few different states and that [a] review of a number of states found that some states simply have a complete ban on the simultaneous collection of SSDI and unemployment insurance.” See Council minutes at 5.
Framed in this way, this proposed eligibility ban allegedly only applied to very few individuals. The Advisory Council pushed back on the retroactive application of this ban, see Advisory Council Meeting — 2/21/13 (21 Feb. 2013), but accepted that the eligibility ban should apply to all SSDI recipients, see Advisory Council Meeting — 1 April 2013 (1 April 2013).
The eligibility was then enacted as part of SB200/2013 Wis. Act 26.
The false assumptions within D12-05
There are more, but the following false assumptions are intrinsic to Wisconsin’s SSDI/UI eligibility ban and the whole concept of disabled people not also being workers.
The number of SSDI recipients affected by the eligibility ban
Originally, the Department only considered 50 or fewer claimants to be affected by this unemployment eligibility ban. See SSDI and unemployment: recent developments (5 June 2015). Then, when first implemented, the ban affected 687 claimants. Id. A few months later, the 2015 Advisory Council report at 8 indicated:
The ban on simultaneously collecting both Social Security Disability Insurance (SSDI) benefits and UI benefits saved hundreds of thousands of dollars for the UI Trust Fund as close to 3,500 UI claims have been denied through early May 2015.
These numbers were off by more than 150,000. In the 2012 annual SSDI statistical report, there were 157,689 SSDI recipients working in Wisconsin that year. In the 2015 annual SSDI statistical report, there were 161,864 SSDI recipients working in Wisconsin that year. The workforce in Wisconsin in these years was between 2,642,306 and 2,722,302.
That is, when the unemployment eligibility ban was first proposed, there were nearly 160,000 SSDI recipients working in Wisconsin. Not 50. Not 657. And, not even 3,500.
Disabled people, work, and substantial gainful activity
The proposal created a picture of disabled folks being either disabled and receiving SSDI benefits or working and NOT being disabled. This picture is ludicrous, based on the number of SSDI workers in the state and the size of the state’s workforce.
- In 2012, 1 in 16.76 Wisconsin workers were receiving SSDI benefits.
- In 2015, 1 in 16.82 Wisconsin workers were receiving SSDI benefits.
As obvious here, one out of seventeen workers in Wisconsin IS receiving SSDI benefits. So, disabled people ARE working. In fact, nearly all disabled people receiving SSDI benefits were working (more than 90%). In 2015, the total number of SSDI recipients in Wisconsin was 178,051. So, only 16,637 SSDI recipients in 2015 were NOT working, or 9.34% of all SSDI recipients. In 2019, 156,887 out of 184,985 SSDI recipients worked. The effect of the SSDI eligibility ban was actually creating what it alleged, as four years later the number of SSDI recipients was down to 84.8%.
Disabled workers are NOT working, for the purposes of SSDI eligibility, in “substantial gainful activity.” Rather, literally 150,000+ Wisconsin residents are working part-time jobs of various kinds to supplement their monthly SSDI benefit. As noted below, none of them are getting rich off of this work or in combination with their SSDI benefits. They are working because they need to work and because they want to work.
But, because they have a major physical or mental disability, they can no longer function in the kind of work they previously did and which previously supported them. Their disability is life-altering, and so they become eligible for SSDI benefits because of that disability and when they have sufficient earnings prior to becoming disabled to establish financial eligibility. See this background discussion of SSDI eligibility from the 2019 SSDI statistical report for the history and mechanics of SSDI benefits.
Note: There are many programmatic and financial incentives for disabled individuals to return to gainful, substantial work. So, numerous individuals may receive SSDI benefits for several years because of their disability until they can learn new techniques and skills in response to that disability. A person who loses a hand certainly is disabled. Over time that person might learn to function adeptly at some profession with just one hand, and hence no longer be disabled. In the meantime, however, that person may well work as a cashier at a fast food restaurant for a few hours a day. The SSDI program is currently set up to encourage individual to find substantial gainful employment through training programs, trial runs at full-time work, and taking on part-time jobs as ways for SSDI recipients to transition off of the benefit program.
The income of SSDI recipients
The unemployment claimants I am currently working with receive a monthly SSDI benefit at around $600 at the low end and over $1900 at the high end (these claimants at the high end are blind or missing limbs and had substantial earnings before becoming disabled). As obvious here, no one is getting rich from their SSDI benefits.
For 2015, the average monthly SSDI benefit in Wisconsin was $1,157.75 and the median SSDI benefit was $1,074.00. That year, 10.5% of SSDI recipients in Wisconsin received less than $600 per month. See Table 16 of the 2015 SSDI statistical report. In 2019, the average monthly SSDI benefit in Wisconsin was now $1,246.39 and the median SSDI benefit was $1,156.00. That same year, 9.4% of SSDI recipients in Wisconsin received less than $600 per month. See Table 16 of the 2019 SSDI statistical report.
So, nearly all SSDI recipients need to work in some way to supplement their meager SSDI benefit. Under Social Security law, SSDI recipients can receive a certain amount of income from work without that income affecting their SSDI eligibility. In 2020, that amount was $1260 per month. To put that number in perspective, that monthly income would produce a weekly benefit rate for unemployment benefits of only $144 per week.
As noted above, there are numerous programs for encouraging SSDI recipients to work more hours and receive additional income without affecting their SSDI benefit for a certain period of time. In this way, the SSDI program allows for a transition period in which SSDI recipients can return to full-time regular work and substantial gainful activity without immediately losing their SSDI benefits.
This transition period is crucial for many SSDI recipients because the key benefit available to SSDI recipients is availability of Medicare coverage after they have received SSDI benefits for two years. As SSDI recipients have a disability for which medical coverage is most likely essential, they cannot at all afford to lose that coverage even for a day.
Given that Wisconsin has failed to expand its Medicaid coverage under the Affordable Care Act, SSDI recipients usually cannot afford purchasing their own medical coverage. That is, SSDI recipients need to maintain their Medicare coverage until they can land a full-time job that includes medical coverage for them and their families as a benefit to that job.
So, SSDI recipients are working because they absolutely need to work in order to pay their basic food and rent bills. And, just like any other worker, SSDI recipients can be laid off or need to quit a job for good cause just like any other worker. They are not “a narrow category” of individuals. Nor are SSDI recipients and workers distinct from each other as theorized in the Department proposal.
SSDI recipients work just like everyone else who works, and SSDI recipients are just as likely to lose jobs just like everyone else. That is why unemployment insurance benefits are NOT counted for federal purposes against an SSDI benefit.
In the day-to-day lives of disabled people, there simply is no either/or with SSDI and work/unemployment. For SSDI recipients, there is work and unemployment just like with the non-disabled. In contrast to non-disabled workers, however, the Department proposed here to cut the disabled off from receiving unemployment benefits because the Department pretended that disabled people did not actually work. And so, the Department cruelly proposed taking away unemployment benefits from a group of people already struggling to get by because of disabilities after losing essential jobs. The Department took this action under the guise of preventing these disabled workers from “double-dipping” into two different “safety nets.”
Double-dipping and fraud
Because the Department presumes that disabled people receiving SSDI do NOT work, it than accepts the converse claim that SSDI recipients should NOT be eligible for unemployment benefits. In this worldview, any disabled person receiving both SSDI benefits and unemployment benefits is “double-dipping.”
Hence, the example cited by the Department as justification for this eligibility ban is an individual who falsified both SSDI and unemployment claims in New Mexico, Wisconsin, Kansas, and Montana. See D12-05 at 5. For the Department, anyone receiving both SSDI benefits and unemployment benefits is presumed to be fraudulent.
But, as the numbers above reveal, this example is pretending that one person’s fraud applies automatically to all disabled persons who lose jobs and want to claim unemployment benefits because of that job loss. The ten of thousands of disabled workers are NOT committing fraud when they work. They are just working, as the SSDI programs allows and encourages them.
The lengthy footnote in D12-05 reveals that under Social Security law work and unemployment benefits do NOT indicate a lack of disability. In short, that footnote contradicts completely the idea in the proposal that work and unemployment eligibility is antithetical to SSDI eligibility and benefits. Yet, this text and the legal holdings set forth in the court decisions matter for naught. See also this 2006 letter and this 2010 letter from the Social Security Chief ALJ to other Social Security administrative law judges over the role of unemployment eligibility in assessing SSDI benefit claims. Actual law is not going to get in the way of the Department’s perception of “double-dipping.”
Eligibility ban vs. fiscal offset
The Department’s presentation of this proposal switches without explanation from it being an eligibility ban to a financial offset.
The proposed statutory language is an obvious eligibility ban. But, the discussion of the proposal is replete with examples and rhetoric about a fiscal offset. For instance, the closing sentence quoted above from the proposal: “Yet, federal law does allow that the unemployment benefit amount of an individual to be reduced by the receipt social security disability insurance benefits.”
And, in a description of the equitable effect of this proposal: “The overlapping payment of both social security disability insurance and unemployment insurance payments under the structure of both programs should be the exception.” D12-05 at 4.
When the proposal came under legal challenge, the Department’s efforts at defending it, as detailed below, turned almost completely to an argument about D12-05 being a fiscal offset to prevent dual payment of disability and unemployment benefits.
Not surprisingly, even the Department’s legal claims about what other states had done lacked basic support. At the time of this proposal, only two states actually applied a financial offset, and that offset was 50%, not 100%, and only North Carolina had an eligibility ban. See DWD Proposal D15-01 — Legal Red Flags at n.7, citing Comparison of State Unemployment Laws: Ch.5, Nonmonetary Eligibility at 5-45.
Note: North Carolina enacted its own SSDI ban — declaring SSDI recipients unable to work — the same year as Wisconsin. See N.C.S.L. 2013-2 § 5 (19 Feb. 2013).
Subsequent research reveals that Minnesota’s 50% offset actually only applies when a person starts receiving SSDI benefits. See Minn. Stat. § 268.085, subd. 4a. After his or her benefit year is over, there is no deduction for SSDI benefits See this explanation from 2015.
Furthermore, Illinois removed its 50% offset for SSDI recipients in 2016. See IL P.A. 99-488 (eff. 3 Jan. 2016), which removed the 50% offset and any eligibility limitation based on SSDI benefits; see also 820 ILCS 405/611.
Note: This rhetorical shift from eligibility ban to financial offset reoccurred in 2020 when the Department described its state law to federal officials. See this letter brief at 3-5.
The first test of D12-05
As enacted, this eligibility ban did not fare well at first. In Gary Kluczynski, UI Hearing No. 14400214AP (30 May 2014), the Commission held that this original ban on receiving unemployment benefits only applied to a single week in which SSDI benefits were received. In practice, then, this eligibility ban was a financial offset. But, importantly, this financial offset was only for one week of unemployment benefits per month.
A dozen or so other SSDI recipients then had their eligibility bans on unemployment benefits redone in light of Kluczynski. The Department was not happy at all.
The Department’s response to Kluczynski: D15-01
The Department challenged Kluczynski and companion cases in court, and those challenges eventually led the Department to revise to its benefit the venue and departmental error provisions in unemployment law. See Department proposals, 2021 edition, and going back to 2019 (22 March 2021) (reviewing Department changes to departmental error) and UI bill public hearings and UI concealment (12 February 2016) (describing opposition to court review changes proposed by the Department).
At the 16 April 2015 meeting of the Advisory Council, the Department voiced its opposition to Kluczynski:
SSDI — Currently, there are several SSDI cases on appeal to the circuit court. One case has been fully briefed and the department is awaiting a decision. As indicated by the litigation, the department has a difference of opinion with LIRC. LIRC has only recently raised concerns regarding the American with Disabilities Act (ADA) and other issues relating to benefit ineligibility. The current statute was approved by USDOL and federal law allows a total reduction of benefits for disqualifying income. LIRC is referencing policy considerations. Policies are decided by the Council, Legislature and Governor.
Council Minutes at 8. The Department also proposed a re-write of the eligibility ban in D15-01 to create an eligibility ban that applied to every week a person received unemployment benefits, so as to undo the holding in Kluczynski regardless of any court decisions.
Note: The Commission’s concerns over the Department’s SSDI eligibility ban were not “policy” differences with the Department but specific legal problems with an eligibility ban running up against federal anti-discrimination law, SSDI law, and federal requirements for state administration of its unemployment program. See DWD Proposal D15-01 — Legal Red Flags.
D15-01 is the eligibility ban that we have today. Despite warnings from the Commission and myself, the Advisory Council approved of D15-01 at its April 2015 meeting, see SSDI benefits and unemployment (22 April 2015), and this proposal was enacted as part of 2015 Wis. Act 334/AB819.
Note: Actual passage was a story in itself. See Update on UI legislation (16 March 2016).
As currently enacted, this ban consists of the following statutory provisions.
Wis. Stat. § 108.04(2)(h):
A claimant shall, when the claimant first files a claim for benefits under this chapter and during each subsequent week the claimant files for benefits under this chapter, inform the department whether he or she is receiving social security disability insurance payments, as defined in sub. (12) (f) 2m.
Wis. Stat. § 108.04(12)(f):
1m. The intent of the legislature in enacting this paragraph is to prevent the payment of duplicative government benefits for the replacement of lost earnings or income, regardless of an individual’s ability to work.
2m. In this paragraph, “social security disability insurance payment” means a payment of social security disability insurance benefits under 42 USC ch. 7 subch. II.
3.a. Except as provided in subd. 3. b. to d., an individual is ineligible for benefits under this chapter for each week in the entire month in which a social security disability insurance payment is issued to the individual.
b. In the first month a social security disability insurance payment is first issued to an individual, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.
c. Following a cessation of social security disability insurance payments to an individual and upon the individual again being issued a social security disability insurance payment, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.
d. Following cessation of social security disability insurance payments, an individual may be eligible for benefits under this chapter, if otherwise qualified, beginning with the week following the last Saturday of the month in which the individual is issued his or her final social security disability insurance payment.
The Evers’ SSDI budget proposal
In his 2021 budget, Gov. Evers proposed replacing the current eligibility ban with a 100% financial offset. While the budget bill is thousands of pages long, the SSDI-UI provisions number just a few pages.
As proposed, Gov. Evers transforms the current eligibility ban into a 100% financial offset applied on a weekly basis to claimants wanting unemployment benefits.
The continued presumption that disabled folk do not work
A weekly financial offset on unemployment benefits will have a devastating impact on SSDI recipients. Given that most SSDI recipients are working in low-wage work and usually earning a thousand dollars or less per month, they qualify for some of the lowest weekly benefit rates allowable in Wisconsin.
For example. a disabled worker receiving $800 a month in SSDI benefits would, under Gov. Evers’ proposal, find that $200 per week would be applied against their weekly benefit rate. So, to receive an actual unemployment benefits, this disabled worker would need to have a weekly benefit rate greater than $200 to receive any actual unemployment benefits.
None of my current SSDI clients have a weekly benefit rate higher than $174. Most have the minimum weekly benefit rate available in Wisconsin for PUA benefits — $163. If the minimum PUA rate did not apply to them, their weekly benefit rate would be well below $163 and probably less than $120, if they qualified at all for a benefit year.
Here is an extremely conservative estimate of who would be affected by this eligibility ban — nearly all SSDI recipients in Wisconsin who ever lose work.
12 weeks (less than the avg claim length in 2018 and 2019)
$100 avg WBR for SSDI recipients
40,000 SSDI recipients (out of 150,000+) who lose a job through no fault of their own in a calendar year
-----------
$48,000,000 in annual unemployment benefits at issue
So, under Gov. Evers’ SSDI offset budget proposal, $48 million in unemployment benefits to SSDI recipients would likely go unpaid. Even if the number of SSDI recipients is halved to 20,000, the impact on unemployment benefits at issue is still $24 million.
And, this offset would likely be as comprehensive as any eligibility ban. Only claimants with a monthly SSDI benefit of less than $400 a month would still be eligible for unemployment benefits under this scenario. That low amount for a monthly SSDI benefit, however, is highly unlikely, as the Wisconsin SSDI benefit average in 2019 was $1,246.39.
On the other hand, a weekly benefit rate of $100 (or less) for SSDI recipients is extremely likely. So, Gov. Evers’ proposal would continue to keep $48 million in unemployment benefits out of the hands of SSDI recipients through a financial offset rather than an eligibility ban.
Note: These numbers pale in comparison to the under-reported Department numbers, when in 2015 the Department congratulated itself on halting benefits to around 3,500 SSDI recipients (see p.8 of the council activities report) and thereby preventing $2.3 million in unemployment benefits from being paid out (see p.34 of this financial report).
Gov. Evers’ budget proposal may end the outright discrimination going on with SSDI recipients. But, it does not stop the cruelty of cutting them off from a vital workplace right when they most need it financially. Gov. Evers should know better. At least under Kluczynski, SSDI recipients could still receive unemployment benefits on the weeks they did not receive their SSDI check. But, Gov. Evers’ offset proposal goes further than what exists in any other state to create a financial offset that in practical terms accomplishes what the original 2012 SSDI proposal sought to accomplish: preventing SSDI recipients from receiving any and all unemployment benefits under the guise of preventing these disabled workers from “double-dipping” into two different “safety nets.”
Should this proposal pass, SSDI recipients in Wisconsin ought to leave a state that excludes the work that more than 90% of them perform from mattering when they stop working through no fault of their own. They have suffered enough. Nearly every other state outside of North Carolina would allow SSDI recipients to receive any unemployment benefits due them without any offset whatsoever (as previously noted, the 50% offset in Minnesota only applies during the claimant’s first year of SSDI benefits). There simply is no reason why Wisconsin should continue to persecute disabled folks as it has been doing.
Wisconsin Unemployment 