Explaining the "Double-Dipping" Provision

As the Senate looks for offsets for an unemployment insurance extension, there is one provision that has gotten some attention: ending "double-dipping" for those receiving both UI and federal disability benefits. Although options to address this issue, even in their most aggressive form, would not fully offset a year-long (or through mid-November) extension, it could offset most of the costs of a three month extension and could be used in combination with other policies to make a longer extension deficit-neutral.

The policy at stake involves disallowing beneficiaries in unemployment insurance (and in some cases trade adjustment assistance) from also receiving disability insurance benefits. The justification is simple: UI (and TAA) recipients are supposed to be actively seeking work, while disability insurance is generally supposed to go to people who are unable to work for an extended period of time (DI beneficiaries are allowed to earn up to $1,070 per month). This problem has to be addressed with legislation since, according to the Government Accountability Office, "While SSA must reduce DI benefits for individuals receiving certain other government disability benefits, such as worker’s compensation, no federal law authorizes an automatic reduction or elimination of overlapping DI and UI benefits." The GAO noted that such payments could be an indication of "improper payments" and suggested that the Department of Labor and the Social Security Administration look into the circumstances of people receiving both benefits and taking action (or urging Congressional action) where appropriate.

There are a few ways to go about ending double-dipping. Both the President's budget and Senate Majority Leader Harry Reid's (D-NV) amendment to the three-month UI extension would reduce DI benefits dollar-for-dollar by the amount of UI benefits the person is receiving. This less aggressive version of the policy would save $1.2 billion through 2023 and $1.3 billion through 2024.

A more aggressive version, proposed by Sen. Tom Coburn (R-OK), would suspend DI benefits in any month a person is also receiving unemployment benefits. This would save about $5 billion over ten years. The most aggressive version from Sen. Rob Portman (R-OH) and House Ways and Means Social Security Subcommittee Chairman Sam Johnson (R-TX) would remove those who receive UI or TAA benefits entirely from the DI rolls. Those beneficiaries could re-apply for DI when they are no longer receiving those benefits after going through the requisite waiting period. This policy would up the savings to $5.4 billion.

Different Policies for Eliminating/Reducing UI and DI Overlap
    President's Budget/Reid Amendment Coburn Bill Portman/Johnson Bills
Treatment of Overlap    DI benefits reduced dollar-for-dollar by amount of UI benefits DI benefits eliminated during month UI is received Removed from DI rolls if UI or TAA is received
Treatment in Waiting Period   N/A Immediately eligible for DI when receipt of UI stops Must wait 5 months to re-apply
Savings   $1.2 billion $5 billion $5.4 billion

Source: CBO, Sen. Coburn's office

In short, there are different ways of going about eliminating "double-dipping" of unemployment and disability benefits. The Senate has several approaches that would help offset the cost of reinstating extended unemployment benefits, but we will see how lawmakers ultimately choose to do it, if at all.