Your Guide to Social Security Disability Back Pay

Your Guide to Social Security Disability Back Pay

social security disability back pay

Many Social Security Disability Insurance (SSDI) applicants are discouraged when they find out there’s often a significant waiting period before you can start receiving benefits. While this delay of funds can make staying afloat financially more difficult in the meantime, there is a silver lining to look forward to—Social Security Disability back pay

What Is Social Security Disability Back Pay?

By the time you are approved, months or even years may have passed since you first began the Social Security Disability application process. In many cases, the Social Security Administration (SSA) will issue you payments for the monthly benefits you would have received while your application was under review. This is often referred to as SSDI back pay.

Does Everyone Get Back Pay for Disability?

The vast majority of applicants who are approved for SSDI benefits will receive back pay for the period of time between the day they applied and when their application is accepted. How much back pay you will receive depends on how long it took you to be approved. Since many first-time disability applicants are denied and must go through the SSDI appeals process, this amount can add up over time.

The only exception to this is those who get approved for disability benefits quickly. Often these are people with the most severe conditions, including those disabilities who qualify for compassionate allowance and people with terminal illnesses. Because many of these applicants are approved in as little as two months from the time of application—and because the SSA has a mandated five-month waiting period before you can qualify for benefits—these SSDI recipients likely won’t receive any back pay.

How Is SSDI Back Pay Calculated?

The amount of back pay you receive may vary considerably depending on the length of time it took you to get approved and your determined disability benefits amount. If you’ve already found out how much your monthly benefit will be, you can easily calculate how much back pay you’ll receive by multiplying your monthly payment by the number of months between applying for benefits and when you were approved (minus, of course, the standard five-month waiting period). 

For example, let’s say you initially applied for SSDI benefits in January of 2019 and were denied (like most first-time applicants). Let’s say it took five months for you to receive the denial. In June 2019, you requested a reconsideration review. This took another three months, putting you in September 2019. 

Your reconsideration review was also denied (again, a very common occurrence), so you requested a disability hearing. You waited a whole year before you got the chance to present your case to a disability judge in September 2020. Within two months of that hearing, you finally got approved for SSDI benefits in November 2020. Your monthly benefit is determined to be $1,000. 

At this point, it’s been 22 months since you applied for benefits. After subtracting the five-month waiting period, you are left with 17 months during which you did not receive benefits. As such, you would be entitled to $17,000 in disability back pay.

Is There a Limit on Social Security Disability Back Pay?

There’s no real limit on how much SSDI back pay you can receive. If it took three years from the time you applied to the time you were finally approved for benefits, you could receive all but five months of back pay accrued during those 36 months. It all depends on how long your case takes to approve.

When it comes to retroactive pay, on the other hand, there are limits to how much the SSA will pay out. Retroactive pay refers to monthly benefits you may have been entitled to based on your disability onset date. In most cases, the SSA will assume that your disability began the day you applied for benefits. With the help of a qualified Social Security Disability lawyer, you may be able to successfully argue for an earlier disability onset date. If you are able to do this, you can receive retroactive benefits up to 17 months prior to your application date. Unlike back pay, retroactive benefits are limited to 17 months regardless of whether you’ve been disabled prior to that time.

Need help covering your bills while your SSDI application is processed? Find out if you qualify for financial aid while waiting for disability.

When And How Will I Receive My SSDI Back Pay?

SSDI back pay is usually paid in a lump sum unless you are also receiving Supplemental Security Income (SSI), in which case you’ll receive both SSI and SSDI benefits in three installments. When you’ll receive your back pay lump sum is a bit less certain. Some beneficiaries report receiving their back pay before they’ve even been notified that they have been approved for SSDI benefits. 

Others may not see back pay deposited into their account until a few weeks or months after they begin receiving their regular monthly benefits. You should receive a Social Security Disability award letter containing your benefit amount, regular payment dates going forward, how much you’re owed in back pay, and a rough timeline of when to expect your lump sum.

Is Social Security Disability Back Pay Taxable?

Most states do not tax SSDI benefits or Social Security Disability back pay. However, some states may require you to pay taxes on them. See how SSDI back pay and other SSDI benefits are taxed in the exceptional states listed below.

  • Montana imposes its full income taxes on SSDI benefits and back pay at their state income tax rate.
  • New Mexico imposes full income taxes on SSDI benefits and back pay, with exemptions for low-income individuals and those over the age of 65.
  • Utah imposes full income taxes on SSDI benefits and back pay, but does offer tax credits depending on your age and household income.
  • Connecticut, Colorado, Kansas, and Missouri tax SSDI benefits and back pay based on your adjusted gross income (AGI).
  • Minnesota, Nebraska, North Dakota, Rhode Island, Vermont, and West Virginia tax SSDI benefits and back pay at the federal rate, but many offer tax credits or income deductions.

Get Help Getting the SSDI Back Pay You Deserve

Applying for disability benefits can be confusing, time-consuming, and frustrating. To get help with applying, appealing a decision, or just to talk about all your SSDI legal options, contact Social Security Disability Advocates USA. 

We’ll schedule a free consultation to review your case and help you navigate locating financial aid while waiting for disability. Call us today at 602-952-3200, chat with us via LiveChat, or send us a message using our secure contact form

This is attorney advertising. SSDA, LLC is a group of attorneys that pursues claims for Social Security Disability benefits on behalf of its clients against the Social Security Administration. SSDA, LLC is in no way a part of the Social Security Administration. Further, the information on this blog is for general information purposes only. Nothing herein should be taken as legal advice. This information is not intended to create, and receipt or viewing does not constitute, a representative-client relationship.

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