SSDI Back Pay: What It Is and Who Qualifies

( – If you are unfortunate enough to need disability benefits, then you have almost certainly already worked out that it can take a long time to get your claim approved. In fact, many people struggle a lot while trying to get social security disability insurance (SSDI) benefits. Most claims are denied at least once.

Thankfully, many recipients are approved for back pay, meaning they do eventually get the benefits they were awarded.

What is SSDI Back Pay?

SSDI back pay is a payment of the benefits you would have accrued between the end of the five month waiting period and the time you were finally approved.

Interestingly, you can also get benefits for the period of time between becoming disabled and applying. However, Social Security will assume the date you applied is the date you became disabled and you will need to establish and prove it if you became disabled sooner, and sometimes they may try to change it. In these cases it is best to get an attorney. For example, you may be able to establish your onset date as the date you quit work. The limit on retroactive benefits, that is benefits received for time before you applied is twelve months.

For SSDI interest is also paid on your back pay. This is not true for SSI back pay, if you happen to be getting both.

Who is Eligible for SSDI Back Pay?

Anyone who is approved for disability and who’s case takes longer than five months is eligible for back pay. There are no specific qualifications.

How Is Back Pay Paid?

SSDI back pay is typically paid in one lump sum, however, if you are also approved for SSI, you will be paid in three equal installments, six months apart, but you can ask for a larger sum if you need money for necessities such as food or housing or to pay off debts. You will also get one lump sum if your life expectancy is less than twelve months or if you are no longer disabled by the time you receive your back pay.

As far as when you receive the payment, that is somewhat unpredictable. The check has been known to land in somebody’s bank account before they get the notification that their claim is approved. Or it can take a bit of time, but you should receive it within sixty days of approval. As a note, if you paid a lawyer, then they will get their cut out of your back pay. (Most social security lawyers work on contingency, and they can be paid as much as 25% of your back pay or $6,000, whichever is less).

Back pay is typically deposited into your bank account directly. When you apply for disability you will also agree to a direct deposit agreement to receive your benefits.

Is Disability Back Pay Taxable?

Yes, if your overall income is high enough. However, the IRS will permit you to use “lump-sum election,” which means that you can refigure the back pay from a previous year into that year’s income. This formula is kind of complicated and you may want to use good software or a tax professional to make sure you do it right.

If you get both SSDI and SSI, then your SSI will be reduced in ways which take the SSDI income into account.

SSDI back pay is awarded to people who’s disability case takes longer than five months to resolve. It covers any time between the end of the five month waiting period and approval and also any time between disability onset and application, although this can be harder to prove. Everyone who is approved for disability is eligible for back pay and you should receive it, minus any legal fees, within sixty days of approval.

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