My answer to this question is yes, you can. However, it is complicated.
When you file for unemployment benefits with your state labor department, you usually have to say that you are ready, able and willing to work. When you apply for Social Security disability insurance (SSDI) benefits, you’re telling the Social Security Administration (SSA) that you are disabled and can’t work. This seems like a contradiction. In some cases, it is. However, there are times when people getting unemployment benefits can meet SSA’s definition of disability and get approved for SSDI.
At the lower levels of the SSDI application process – the initial level or the reconsideration level of an initially denied application – SSA’s disability determination examiners are likely to interpret collecting unemployment benefits as an inconsistent message. After all, it appears that you are looking for work, but telling SSA you can’t work. You shouldn’t give up, though. Many cases go all the way to the hearing level before getting approved for SSDI. At a hearing, the Administrative Law Judge (ALJ) at your hearing will delve deeper into the underlying circumstances of your unemployment and ability to work.
I’ve seen many claimants collecting unemployment benefits in my 18-year experience as an attorney pursuing disability claims for denied claimants. Many of those claimants have been awarded benefits. I think it impresses a judge more favorably to see a claimant who is collecting unemployment try to find a job than not try at all. Not every attorney would agree with me but I think that when a judge asks “Have you looked for work?” and you can say, “I looked for work that I thought I might be able to do within the limitations set by my doctor but I couldn’t find work I could do ” the judge is more likely to decide, “This person wants to work and is trying to work, but can’t.” The key is to look for work that reflects the limitations you experience on a day to day basis. If the judge sees that you looked for jobs beyond the physical limitations you put in your SSDI application, this could indicate to the judge that you are not too disabled to work.
The thing is, while going through the SSDI approval process, you don’t want to stop your unemployment benefits if you need the money. Not collecting will not speed up your claim. It usually takes one to three years to get a hearing, and receiving unemployment benefits can soften the financial impact of being disabled. Most people in this situation choose to wait it out.
If you do get approved for SSDI, and your retroactive award overlaps into months where you received unemployment benefits, you may have to pay back the unemployment money. Rules vary from state to state so you will want to find out about this from your unemployment office. You definitely don’t want to collect while getting SSDI benefits too, so be sure to stop those unemployment benefit payments as soon as you know your SSDI claim is approved. Not doing so could create an overpayment by the state that you might have to pay back.