Social Security Offset – Unemployment Insurance Benefits

October 21, 2009
UMA Reporting from the Capitol

For the second time in as many months, the Interim Committee on Workforce Services debated Social Security Offsets to Unemployment Insurance benefits. In last month’s committee hearing lawmakers heard testimony that an agreement made several years ago between labor and management to share federal dollars for unemployment. They were told by labor interests and the committee chairman, Steve Mascaro, that with a recent Utah Supreme Court decision declaring Social Security Offsets on workers compensation benefits unconstitutional. Proponents of eliminating the offset argued the similarities between UI and WC would in a very short time transfer the unconstitutional designation to UI benefits.

In 2002, when the original agreement was struck to split $64 million from federal funds between the UI trust fund and increasing benefits for employees who are laid off and who are drawing social security benefits. That agreement moved the offset from 100% to 50% for as long as the federal money lasted. The offset reduction was to sunset June 30, 2010. Now with the change brought by the Utah Supreme Court the legality of doing that was in question.

The bill considered today changed the direction of last month’s decision to move the social security offset to zero and reduce the weekly benefit amount for all benefit recipients, including those on social security, by $3. This is a revenue neutral solution that keeps the agreement originally made and more importantly prevents imposing additional tax burdens on employers in Utah. UMA worked closely with other employer representatives on the UI Advisory Council to strike this compromise agreement. The bill phases in effective July 3, 2010. All applications for UI after that date will receive the $3 reduction. The 50% offset on social security remains until July 3, 2010.

The committee approved this measure as a committee bill. It will be introduced in the 2010 General Session.