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Social Security Recipients Stunned by Reduced Unemployment Benefits

Little-known "offset" clause triggered by plummeting unemployment insurance trust fund

Virginia State Page September 2010

Nora Schroeder, outside her Richmond home, is one of a number of older people affected by a catch in Virginia's unemployment compensation law that reduces benefits to those also receiving Social Security. — Matt Eich/LUCEO

When the retirement home where she worked closed last November, Cleta Gilmore of Abingdon was able to manage with unemployment benefits to supplement her Social Security income.

Until January.

That’s because the reserves in Virginia’s unemployment insurance trust fund plummeted below 50 percent of the amount projected to be needed for the year. That triggered a state law cutting benefits to residents who also receive Social Security or Railroad Retirement Act payments. Gilmore’s unemployment benefit went from $200 a week to $67.

“I drew what I was supposed to in December, and then wham!” said Gilmore, 75, a widow whose brain-injured son lives with her.

Gilmore was one of more than 24,000 Virginians whose unemployment benefits were reduced. Roughly 3,000 jobless people don’t qualify for any unemployment benefits since the offset law was triggered, according to Bill Walton, the Virginia Employment Commission’s acting chief of benefits.

The law reduces unemployment benefits by half of a person’s Social Security check. So someone who receives $300 a week from Social Security would see his or her unemployment benefit cut by $150 a week.

AARP Virginia believes the policy crosses the line from unfair practice to age discrimination and will ask the General Assembly to eliminate the provision when it meets in January, said Bill Kallio, the state director.

Since 2002, 17 states have repealed offset laws. Virginia is one of five states that still has the law.

A 2005 change in the Virginia law set the trigger for the offset to take effect if the unemployment insurance trust fund’s reserves dropped below 50 percent.

Kallio said he wasn’t worried then because the fund was forecast to stay well above the threshold.

“All of a sudden comes an unbelievable recession,” he said.

Kallio urged people to contact their legislators now and encourage them to support measures to eliminate the offset.

Soaring unemployment wiped out the fund’s reserves, said state Sen. John C. Watkins, a Powhatan Republican who chairs a commission that oversees the fund. Now, the state is borrowing up to $1.3 billion from the federal government to pay claims.

Watkins said he understands the plight of retirees, but he argues others are worse off. “A lot of those unemployed don’t have Social Security. They don’t have anything. From my point of view, they ought to come first.”

Those who get private pensions or have other sources of income are not penalized.

For Val Coluni of Blacksburg, the offset eliminated his entire $153 weekly unemployment benefit after he was laid off as a driver for a rental car company.

Coluni, who turns 77 this month, retired from a 30-year career in human resource management and said he doesn’t need the money. Still, he contacted state legislators to complain about what he perceived as an inequity.

“I thought it was unfair because it was … zeroing in on Social Security recipients,” he said.

Nora Schroeder, 79, of Richmond, works every tax season for the state, but now doesn’t get any unemployment benefits the rest of the year to supplement her $1,231 monthly Social Security payment. Meeting expenses for herself and her son who has disabilities is difficult, she said. Her electric bill alone is $271 a month.

Gilmore finally found part-time work in her rural area taking care of an older woman. The job pays more than the reduced unemployment benefit, but she’s still unhappy with state officials.

“I thought the unemployment was there to help us if we needed it, didn’t you?” she said.

Sue Lindsey is a freelance writer living in Roanoke.

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