The Social Security Administration offers financial assistance to disabled people through its Social Security Disability Insurance (SSDI) program. However, applicants don’t receive these benefits instantly. Before approving claims, the SSA investigates the claim, and this might take a long time.
If you have applied for SSDI benefits and a significant amount of time has passed, you may be eligible for SSDI back pay. The SSDI back pay amount is calculated by factors such as the disability onset date and the application approval date.
This total payment compensates the applicant for the time it takes to process disability claims.
Social Security Disability Back Pay Overview
Back pay from Social Security refers to the benefits you should have obtained from the Social Security Administration (SSA) while your application was being processed.
The amount of time it took the Social Security Administration to process your claim determines the amount of back pay. You will get back pay only for the period from when you first applied until the time you started getting benefits.
It may not be worth it to pursue back pay if your claim was only delayed for a few months. On the other hand, if you needed to appeal the decision after your claim was denied, the benefits payments you did not receive may have piled up.
Applicants for Social Security disability benefits have four options to appeal a denial of their claim. It may take several months to complete each step of the appeals process. If your appeals process took a long time and you were then approved for benefits, you could collect a hefty back pay.
Back Pay vs. Retroactive Benefits
While the two may sound similar, it is important to know the difference between back pay and retroactive benefits. Retroactive benefits refer to benefits that date back to when your disability started and before you applied for benefits.
On the other hand, back pay refers to benefits that only cover the period between when you first applied for them and when you get them.
Recent Changes to SSDI Back Pay Calculation
While there have been no recent changes to how the Social Security Administration calculates back pay, there have been changes to the benefit amount that applicants are eligible to receive.
This, in turn, has an effect on how much total back pay applicants can receive since back pay is essentially overdue SSDI benefits.
In 2023, SSDI benefits are 8.7% higher than in 2022 due to inflation and increased cost of living expenses. The monthly maximum SSDI payment has increased to $3,627. For 2024, there will be an increase of 3.2% in SSDI benefits, with the total maximum Social Security benefits a person can get increasing to $3,8122 per month.
Every year, the SSA raises disability payments through a Cost of Living Adjustment (COLA). The exact amount of SSDI benefits is based on how much and how recently you’ve paid into Social Security.
SSDI Back Pay Calculation
The exact amount of back pay is different for everyone. An examiner must first evaluate your disability claim before back payments are made.
In order to evaluate your claim for Social Security disability benefits, they will review the documentation you have submitted, which includes personal information as well as details on your health and employment.
SSA will calculate your SSDI benefits after your application is assessed and approved. The claimant will receive a lump sum payment for any back pay benefits once the monthly disability payment has been determined.
Let’s break down the procedure into its components to see how back pay is calculated.
Determining the Onset Date
In your SSDI application, you will list the “Alleged Onset Date,” which is the date you say your disability started. The Social Security Administration will establish the onset of your disability, which is typically the same date as your application.
The term “disability onset date” (sometimes “Established Onset Date” or “EOD”) also refers to this particular date. You can file an appeal if you think you can establish a case for an earlier date.
Calculating the Monthly Benefit Amount
The Social Security Disability Insurance benefits are calculated by a formula that takes into account the highest monthly wages or income you have earned over a period of 35 years. This amount is called your “Average Indexed Monthly Earnings” (AIME).
Calculating Retroactive Back Pay
If the Social Security Administration agrees with your “Alleged Onset Date,” it means that your disability kept you from working before you applied for SSDI. When this happens, the SSA will also give retroactive pay, but it is not the same as SSDI back pay.
If you applied for SSDI and didn’t start getting benefits right away, you should get back pay to make up for any missed benefits payments. However, you will not be paid for the first five months, as this is the waiting period.
Calculating Total Amount of Back Pay
The Social Security Administration will calculate back pay after they have established the monthly SSDI benefits payment amount and the EOD.
If you become disabled in the middle of the month, the Social Security Administration will not consider that month for calculating your back pay because they only recognize entire calendar months.
On the other hand, the month in which you became disabled will count (which, again, according to the SSA, usually means the day you submitted your application).
There is no hard and fast rule about how much back pay you can get, but it will be determined by your average annual wages over the past 12 months. However, the maximum amount will be different for everyone.
12-Month Limit
There is a limit of twelve months on how far back the SSDI back pay can be calculated.
For instance, if your Social Security Disability Insurance application was granted after a period of two years (which is very possible), you might think that you are entitled to 19 months of back pay from the SSA.
This is because the 24 months minus the 5-month mandatory period would equal 19. But there is a 12-month limit, so you can only get SSDI back pay for 12 months.
Conclusion
In conclusion, SSDI back pay is a significant source of income for people with disabilities. Applicants who thoroughly understand the calculation method and eligibility requirements are more likely to receive just compensation, which may be a beneficial financial support system during difficult times.
