Disability backpay is one of the most popular topics related to Social Security Disability programs. Successful claimants awarded disability benefits under both the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs may qualify for disability backpay.
How Does Backpay Work for Disability?
First, let’s review the difference between disability backpay and monthly disability benefits. Disabled claimants receive an approval for disability benefits under the SSDI program which is work-credit based or under the SSI program which is needs-based. Some claimants qualify for and receive disability payments from both programs.
Monthly SSDI benefit amounts depend on your work history and previous earnings. In contrast, the SSI program has capped monthly limits. Both programs receive cost-of-living adjustments each year. We’ve listed the 2022 SSI Federal Payment Amounts in the chart below:
The only difference between disability backpay and monthly disability benefits is that disability backpay is a lump sum amount. This lump sum is equal to your approved monthly disability payment multiplied by the number of months the SSA determines you were waiting for an approval.
As a simple example, if you’re receiving $1,000/month in disability benefits and your waiting period was 10 months, your disability backpay would be $10,000. But there are exclusions and rules that are important to understand when calculating your disability backpay.
How Social Security Disability Calculates Your Backpay
Before you receive disability benefits, you will work through the process of applying for SSDI or SSI benefits. On the initial application, you will list the date you allege you became disabled and unable to perform substantial work of any kind. The SSA has a specific name for this date, they call it your “alleged onset date.”
During the process of applying for, working through denials, and even possibly going to a hearing, SSA determines the established onset date. The clock starts at that date. Disability backpay rules and calculations differ by program. We’ll cover the particulars below.
SSDI Disability Backpay
SSDI benefit payments do not begin until five months after your established onset date. This is SSDI’s standard, five-month waiting period. While it can be financially difficult to wait for benefits, the purpose of this waiting period is to ensure that SSDI recipients have long-term disabilities.
With the above in mind, to calculate your backpay amount, simply count the number of months between your established onset date and your approval date. Then, subtract five months from that number to get your eligible number of months. Finally, multiply the monthly benefit amount by your eligible number of months to calculate your total backpay.
SSDI Backpay Example:
Monthly Approved SSDI payment = $1,200
Approval Date = December 2021
Established Onset Date = December 2019
Waiting Period = 5 Months
SSDI Disability Backpay = $1,200 x 24 months (time between Established Onset and Approval Date) – 5 Month Waiting Period = $1,200 x 19 months = $22,800 in disability backpay
For SSDI specifically, if your established onset date and the application date aren’t the same, SSA caps the onset date as no more than 12 months before your initial application date. As an example, if you allege an onset date of January 1st, 2021, but you don’t file an application until March 1st, 2023, your backpay calculator begins on March 1st of 2022.
Technically, SSA defines back pay as beginning as of your application date. But, if the SSA agrees that your disability began before the application date, they will issue retroactive benefits. Those are included in the lump sum backpay and calculated similarly.
SSI Disability Backpay
The SSI disability program has different rules relating to disability backpay. The main difference is that SSI only pays backpay retroactively to your application filing date even if your established onset date occurs before you filed your application. Also, SSI does NOT have a five-month waiting period and the disability backpay is paid in three payments, not a single lump sum payment. We’ve provided a brief example below:
SSI Backpay Example:
Monthly Approved SSI payment = $800
Approval Date = December 2021
Application Date = June 2020
Established Onset Date = December 2019
SSI Disability Backpay = $800 x 18 months (time between Application Date and Approval Date) = $14,400 in disability backpay
How Long Does It Take to Get Disability Backpay?
SSI awards backpay in three payments. You receive a third of the total amount soon after approval. A second payment arrives six months later and the final payment after another six months. This is intended to help SSI claimants avoid any complications relating to the program’s asset limit. Put simply, claimants must spend the money and not exceed the program’s asset limits to continue receiving benefits. Unlike a portion of SSDI payments, SSI payments are not taxable. The SSA prefers to use direct deposit but in some instances, may agree to send monthly checks.
In contrast, SSDI disability backpay is paid in a lump sum that usually takes around 60 days to receive. It must be paid by direct deposit so you will need an active bank account to receive it. If your income is under $25,000 as a single filer or $24,000 as a married couple, your SSDI income is not taxable. If you exceed those limits, 50% of your SSDI income is taxable. In addition, some states have taxes on your lump-sum payments. Consult your tax professional accordingly.
Disability Lawyers in Charlotte, NC
Are you considering filing for disability benefits and looking for disability lawyers in Charlotte, NC? If you live in Charlotte, Concord or surrounding areas and can’t work due to a mental or physical impairment, you may qualify for Social Security Disability benefits. Give us a call today at 1-877-296-1030 to request a free consultation on your claim.
