Those who can no longer work due to a disability can qualify for Social Security Disability Insurance (SSDI). However, the application process can go on for quite some time before you can finally get your first check from the Social Security Administration (SSA). Luckily, recipients of SSDI can get what they are owed at the end of it all! Back Pay are the benefits you would have received from the time you applied for them. You may have heard it referred to as its unofficial name as “past-due benefits.” It is easier to help you understand back pay by giving a specific example.
SSDI Back Pay: How it Works (With an Example)
Back pay can be difficult to understand without context. That is why this instance offered by the AARP can help lay out the process. Suppose that you have a qualifying condition and it has gotten increasingly severe resulting in you not being able to work anymore. The last date that you were able to work was October 18, 2020. A few weeks later on November 1st, you decide to apply for SSDI benefits knowing that you won’t be able to return to work, leaving you at risk to experience financial hardship. After waiting for some time, you hear back from the SSA and unfortunately your application is denied. However, you don’t agree and therefore you submit an appeal to have your case reviewed again.
After that, you are granted a hearing with an administrative law judge. When the date of your hearing comes up, you present proof to the judge that verifies your need for this assistance. If the judge rules in your favor, you are able to receive payments leading back to October 2020. In this situation, you were finally approved to receive benefits in February 2022! The time when your disability became severe enough to prevent you from working is known as your onset date, according to the SSA.
Approved recipients are subjected to a 5-month waiting period. This period is required by law. After that, your SSDI benefits go into effect. This means that benefits start the sixth full month following the onset date. In this scenario, you have not been working for 15 months. That means that you will receive 10 months of backpay (total months minus a 5-month waiting period).
How You Receive Benefits
The SSA determines the benefits an approved applicant can receive from SSDI. The amount is worked out according to your past salaries. Lastly, SSDI Back Payments can be honored to a recipient as far back as the date they initially submitted an application. You can usually expect to receive your past-due benefits within 60 days of receiving approval on your claim. The SSA pays the entire amount in one payment.
What if You Seek Help from Legal Representation?
Seeking legal representation can be a smart way to ensure that your case is properly reviewed by the SSA! It is important to know how you will cover the fees of your lawyer. Luckily, you don’t always have to pay your lawyer beforehand. In fact, your legal fees can be taken out of your back-pay check. With that said, there is typically a maximum amount that can be taken out for legal fees. This is usually at most $6,000 or 25% of your total back pay check. It is often whichever amount ends up being less. To give an example, if your total back pay was $10,000, the most that would be taken out for your legal fees is $2,500. However, keep in mind the SSA and your legal representation need to come to a fee agreement in advance.
Other Programs that Provide Back Pay
Another program that the SSA provides is Social Security Income (SSI). While both programs provide back pay benefits, each program handles it a bit differently. SSI is an assistance option for specifically low-income individuals. While income is a big factor in determining eligibility, there are also other eligibility requirements to be mindful of.
An example of how SSI and SSDI are operated differently is that there is no mandatory waiting period for SSI. In addition to that, the back pay may not necessarily be paid in one payment. SSI can deliver back payments in three installments and six months apart. Lastly, one of the biggest differences between the two programs is that SSI provides back-pay benefits back to the date that you submitted your original application. This is different from the onset date, as the onset date for SSDI is the date you stopped working.
The Maximum Benefits You Can Get from SSDI and SSI Back Pay
For both SSDI and SSI, there is no limit to how much back pay someone can receive!
Back Pay Examples
As previously mentioned, SSDI has a 5-month waiting period for benefits. The waiting period begins from your on-set date. However, SSI works differently. The chart below demonstrates an example of SSI back pay. However, for both programs, back-pay recipients are given a “date of entitlement.” This is the date when the SSA began owing benefits to the recipient:
Photo source: https://www.nolo.com/legal-encyclopedia/how-are-social-security-disability-ssi-backpayments-calculated.html
After this article you should have a better understanding of what back pay is and how it works. Back pay is an important part of both SSDI and SSI because receiving approval for Social Security can often be a long process. Sometimes taking years to finally receive benefits! SSI and SSDI both offer back pay, but each program operates a bit differently. For this reason, it is key to understand which option can best suit your needs. It may seem like a complicated process but in the long run it can be worth it when you eventually get the assistance that you need! If you need some more information or even have questions then you will want to turn to the SSA. They will be the ones that can provide you additional details and help you through resources when dealing with back pay and the associated programs.