Understanding SSDI Back Pay vs Retroactive Benefits

Social security disability insurance (SSDI) can be very overwhelming. From the application process to approval and from appeals to retroactive benefits, even once you are approved you might find you are still lost in a fog and unable to understand your rights. One of the most frustrating and misleading aspects of collecting SSDI benefits is calculating how much money you can expect to receive based on your SSDI back pay maximum. Since it can take months and months for the application process, SSDI (in most cases) will owe you back pay and/or retroactive pay. Here we explain the difference between the two and how the money owed to you is calculated.

What is SSDI Back Pay?

SSDI back pay is the money owed to all approved applicants following the application process. Because there are delays in SSDI processing time, Social Security Administration (SSA) has to pay your benefits effective from the date of your application. Because it takes such a long time before you actually receive a check, back pay ensures you receive the back pay maximum you are due. As a result, you don’t suffer further financial hardships due to the ongoing SSA backlogs.

What is SSDI Retroactive Pay?

While it might seem that back pay and retroactive pay are the same thing, there is a difference. Not everyone is eligible for SSDI retroactive pay. This is because retroactive pay applies to the money you were eligible to receive before the application process. If you did not apply for SSDI immediately, regardless of your reason, retroactive pay provides compensation for up to one year prior to your application date if you were eligible to receive SSDI benefits. So, this is calculated based on the monthly payments you were entitled to receive prior to your application.

How is Back Pay Calculated?

SSDI back pay is based on the number of months between your established onset date (EOD) and your final approval. The SSA determines your EOD based on the evidence you provide during the application process which indicates when your disability began. However, there is also a five-month waiting period before you can receive your first SSDI benefits payment.

Calculating Back Pay

To calculate the amount of back pay owed, you first count the number of months between your EOD and your approval date. You then subtract the five-month waiting period from the months between the application and approval dates. For example, if it took 10 months for your claim to be approved, you would be eligible to receive 5 months of back pay: 10 months minus 5 months waiting period = five months back pay. Your back pay maximum payment is paid in a lump sum at the time the SSA confirms you are eligible for SSDI benefits. SSDI back pay, is not limited by time restrictions. Therefore, in theory, even it if takes five years to approve your benefits, you are entitled to receive the back pay for every month of the process less the five-month waiting period based on your EOD.

How is Retroactive Pay Calculated?

If the SSA determines you were eligible to receive SSDI benefits prior to your application, they will adjust your EOD to an earlier date. However, the SSA limits retroactive payments to 12 months. Keeping in mind the 5-month waiting rule applies, your EOD would have to be 17 months or more before your application date to receive the full 12 months (17 months minus 5 months waiting period = 12 months retroactive pay).

Calculating Retroactive Pay

Even if your EOD is adjusted beyond 17 months to two years, for example, you cannot exceed the 12 months allowed for retroactive pay. In this case, you can only calculate your retroactive pay based on the same 17 months period allowed. So, you would still only receive 12 months, the maximum. If you are below the 17 months period, you would calculate the money owed based on the number of months before your application date minus the five-month waiting period. So, if the SSA applies an 8-month EOD, it would be calculated as 8 months minus the 5-month waiting period = 3 months for your retroactive pay.

How to Calculate the Total for Retroactive and Back Pay

If you are owed both retroactive and back pay, you would first calculate the number of months between the EOD and approval date. You then deduct the five-month waiting period and add your retroactive months. Multiply this number by your monthly payment amount to find the total amount of back pay due.

How Do I Know My SSA Adjusted EOD is Correct?

The short answer to this question is, that you don’t. That’s why it’s important to understand the rules and your rights. When you are applying for SSDI at a later date, it is advisable to work with a disability advocate. They will ensure you receive the retroactive pay you deserve and that the EOD is correct. They will also provide an accurate alleged onset date (AOD) on your application based on the date they determine your disability began.

Is There a Difference Between SSI and SSDI for Retroactive and Back Pay?

There are two different types of benefits you can apply for with a disability. Supplemental Security Income (SSI) which is approved based on age/disability, limited income and resources, and SSDI which is based on disability and work credits. There are two important differences between the two when it comes to back and retroactive pay:

1. SSI benefits do not have a 5-month waiting period and are payable the month after your approval
2. SSI benefits are not eligible for retroactive pay

If you aren’t sure what type of benefits you should apply for, you can speak to a disability advocate to offer advice on what benefits you are eligible to receive.

Is Interest Applied to Back or Retroactive Pay?

Unfortunately, the SSA does not apply interest to money owed to you either via back or retroactive pay.

Limits to Back Pay and Retroactive Pay

The SSA limits the amount of retroactive pay you can receive to no more than one year prior to the date of your application. To receive the full year, you would have to be disabled for over 17 months before your application. However, when it comes to back pay, the delays experienced in the process through no fault of your own should not impact the back pay you are eligible to receive.

Your back pay and retroactive pay are very important to the compensation owed you during the SSDI application process. Working with a disability advocate is the best way to ensure you receive the full amount of back pay or retroactive benefits you are entitled to receive. They also help you avoid delays in the application approval process and can assist with appeals should your case be denied.

If you are ready to apply for SSDI, be sure you get what you are owed by speaking to Princeton Disability Advocates today.