How is Benefits Back Pay Beneficial?

A man in a business suit is paying back pay to another man.
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Some people are medically eligible for disability payments but have not been approved to begin receiving them. In this case, these people are entitled to back pay, or as the Social Security Administration (SSA) officially calls them, “past-due benefits”. Fortunately, the name doesn’t matter because, in the end, the SSA will make sure that everyone receives the benefits they are entitled to. With that being said, people need to go through an application process and get authorization to start receiving their back pay, and this article should clarify how!

Learning About SSDI Back Pay

Many people are familiar with the process of getting back pay and how filing for a disability claim can take a while. Nevertheless, the duration of the process also depends on the case of the applicant and when they were authorized to start receiving their benefits. For example, consider someone who was diagnosed with a disability on January 11, 2019 and whose case worsened to the point that it affected their ability to work. Then this person submitted an application for SSDI on February 1, 2019, but it was rejected. Next, they filed an appeal after the refusal, and an administrative law judge heard their case. The person can present proof at the hearing to get a decision in their favor. If all goes well and the judge grants the appeal, then it will be ruled that the disability started in January 2019. This eventually qualifies the person for the back pay to which they’re entitled.

This brings us to the question of how much people receive from SSDI. The SSA determines a person’s SSDI benefit amount based on the individual’s prior earnings. According to the law, there is a 5-month waiting period before receiving SSDI benefits. Then, the SSDI benefits begin upon the expiration of this time period. That would be the sixth full month following the onset date. 

However, every case is different. So, if someone applied and was granted authorization, that would make their process way shorter than someone who was rejected. For example if a person who has been managing their disability for 15 months after applying and getting rejected before finally being granted their back pay benefits. Yes, in this case, it sounds like applying for back pay can be quite a process; however, a person is ultimately due the back pay they’re entitled to, even if they wait some time!

Back Pay Procedures at the SSA

Although the back pay claim process is the same, the duration until someone is authorized for their payments will differ from one person to another. Having said that, some people decide to hire a lawyer to defend them throughout the appeals process. In this case, the SSA would deduct the attorney’s costs from that person’s back pay. Thankfully, the fee is only for the lowest sum. That is $7,200, or a maximum of 25% of the back pay – the lesser amount is applied in this case. Most importantly, the SSA must approve the fee arrangement for the legal representative involved in a person’s case in advance. So what happens if someone filed a claim and got it approved? Normally, past-due SSDI benefits are paid in full by the Social Security Administration (SSA) within 60 days of the claim’s approval.

Is Back Pay Only Available from SSDI?

People can also receive back pay with Supplemental Security Income (SSI). However, both SSI and SSDI do vary in some ways. For one, SSI doesn’t have the 5-month waiting period that SSDI does. Additionally, the back pay calculation for SSI and SSDI is not the same. Like we said for SSDI, back pay is calculated based on the date of onset. However, SSI back pay is calculated based on the date of the person’s application. Both programs are state-run assistance options provided by the SSA. On top of that, both programs have no cap when it comes to the amount of back pay a recipient can get! 

Now when discussing amounts of back pay it’s also important to understand the limits of income. A process called lump-sum election is offered by the IRS when recipients of back pay need to refigure their finances. Occasionally a part of your back pay can be taxed, if your total income exceeds a specific limit. The process of lump-sum election works to lessen the chance of this happening. Through this process the IRS allows a recipient to recalculate  the back pay of the prior year, and roll it into the current year. This creates a new earnings structure to be counted for that year, all for sake of taxes.

Also, let’s say a person’s back pay total is greater than the maximum monthly benefit allowed by the SSI program. In this case, the person entitled to back pay won’t get the payment all at once. The back pay will be distributed in three equal payments spaced out over six months. Also note that the maximum SSI benefit in 2024 is $943 per month. So who can take advantage of the SSI? Basically, this is a program that offers assistance to people who meet income criteria and other qualifying requirements.

Instances of Back Pay

SSDI beneficiaries can get back pay starting five months after their disability onset date. However, the situation is different when it comes to the SSI. The following table takes a closer look at SSI:

In Conclusion 

For more information on back pay, people can contact the SSA. Typically, filing for a disability claim can take a while. However, it also depends on the case. If someone is rejected but files an appeal against the judgment, this will take even more time. Thankfully, there is no need to worry because the SSA will make sure that everyone receives the benefits they are entitled to. 

With that being said, SSDI is not the same as SSI, but both are able to offer people the benefits they deserve. This is why it’s essential that anyone who wants to take part in either program do thorough research to know which option suits them best. The good news is that people looking for assistance may find it with government aid programs.

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