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The Social Security Administration provides retirement income for workers who paid Social Security taxes during their careers, but it also manages the Supplemental Security Income program, which provides money to certain aged, blind and disabled people. SSI benefits depend on the recipient’s monthly income. Unemployment benefits are considered a form of unearned income that must be subtracted from SSI benefits.
SSI is designed to provide income to people with little or no income and few financial resources. Benefits are reduced by various sources of earned and unearned income. Earned income describes money gained from working at a job or running a business, while unearned income is money gained from passive activities, such as dividends income and interest income. One-half of earned income and the full amount of unearned income count against SSI benefits.
Unemployment benefits are technically not earnings, because work does not have to be performed to receive benefits. This means unemployment benefits are a form of unearned income rather than earnings. The government lets SSI recipients keep the first $20 of income gained from any source each month, but every dollar of unemployment benefits gained beyond the first $20 reduces SSI on a dollar for dollar basis.
Monthly SSI benefits are based on a basic federal SSI benefit rate of $698. Earned and unearned income are subtracted from the benefit rate to calculate monthly benefits. For example, an unemployed worker who is eligible for SSI and receives $500 in unemployment benefits gets $698 minus $480, or $218 a month in SSI benefits. SSI benefits may be increased beyond the basic federal amount by supplements offered by state governments.
Other Unearned Income
Unemployed individuals can have a variety of sources of unearned income besides unemployment benefits that serve to reduce SSI. According to the Social Security Administration, unearned income includes Department of Veterans Affairs benefits, annuities, pensions, Social Security benefits and the proceeds of life insurance policies. Money received in the form gifts, inheritance, prizes, lottery winnings, settlements and awards also counts as unearned income.
- U.S. Social Security Administration: Supplemental Security Income (SSI)
- U.S. Social Security Administration: Understanding Supplemental Security Income SSI - Resources
- U.S. Social Security Administration: Understanding Supplemental Security Income SSI - Income
- U.S. Social Security Administration: Definition of Unearned Income for SSI Purposes