How is SSDI Back Pay Paid?

The Social Security Administration helps those suffering disability. SSDI, or Social Security Disability Insurance, is for people who have worked and who have developed a disability or condition that makes them unable to work. The good news is that since you paid into Social Security with your FICA contributions, you are entitled to this disability payment. The not-so-good news is that it can take a long time to receive any payments that will help you with medical costs and living expenses.

This is because the amount of time the Social Security Administration takes to process an application can be long. Many applicants go into debt waiting to be deemed eligible.

If your claim is successful, you will be owed back pay for that time between the date you filed for Social Security and the date your application was approved. Back pay is determined by the date that your disability began.

What is Back Pay?

If you are unable to work because of a medical condition, you may qualify for disability benefits. When a claim for disability benefits is filed, it usually takes months for the claim to be approved. Three-fourths of the initial claims are denied during the primary review.
When you file a claim for disability benefits, you must declare a day of onset. This is the day that you first became disabled to work. When your claim is finally approved, Disability Determination Services (DDS) or an administrative law judge will determine the date of onset, or the date you became disabled.

You will receive disability pay back to the date of your disability onset – but no farther than 12 months before you filed your disability claim. The first 5 months of a disability are non-payable. To be disabled, you must have a condition that last 12 months or longer, or it must be a terminal condition that is expected to lead to your death. By the time your claim is approved, the back pay may add up to a hefty sum.

How is SSDI Back Pay Paid?

How Back Pay is Deposited

After 2011, the Social Security Administration required all recipients of SSDI benefits to receive their monthly disability payments by direct deposit online. This means that to receive any back pay, you will need to have a bank account for these deposits to be made into.

Usually applicants will receive their first installment of SSDI back pay 60 days after being approved for disability. After being approved, if you were disabled long before you even applied for disability, you may be eligible to receive retroactive SSDI payments for up to one year.

Back Pay VS Retroactive Payments

Don’t confuse back payments with retroactive payments. Back payments are owed to you up to the time that you applied for benefits. Retroactive payments are given for up to 12 months before you applied for benefits if you can prove that you were already disabled during that time.

For Social Security disability applicants, there is a mandatory 5 month waiting period after you have been approved. This means that once you’ve been approved, Social Security will not be making payments to you until 5 months have passed. This is usually evened out since most Social Security disability beneficiaries will not get their application approved until well after those first 5 months. But you will start receiving, or be owed, benefits on the 6th month once you have been approved.

You can receive your back pay up to 60 days after your application is approved and the SSA decides if you qualify for disability benefits. This is typically paid as one lump-sum and will be directly deposited online into your bank account.

If you were disabled long before you decided to apply, you can hire an attorney to help you challenge your established onset date, or EOD. Your EOD is the date the Social Security administration thinks you became disabled, and is the date on which you applied for benefits.

A Social Security disability advocate or attorney can help you challenge this date so that the onset date will show when you actually became disabled, rather than simply the date you applied. Keep in mind that Social Security will only go back 12 months regarding retroactive benefits.

A Representative Payee

You can have a representative payee to handle your disability benefits. A representative payee could be a caregiver, relative, or a friend. It can be a person, or an organization appointed to the role by the SSA for any claimant who cannot manage or who is unable to direct the management of his or her monthly benefits.

A payee must use the funds for the benefits of the claimant. Of course, the claimant’s necessities should come first. The SSA will usually request a representative payee to submit an annual report regarding the use of the benefits. That form must be completed in detail showing an accounting to the SSA regarding how the benefits were used and/or how any funds were saved.

The representative payee should keep all the receipts for the expenditures associated with the disability funds. That way, you have proof for the SSA, and you can show them that the funds were indeed used for the benefit of the claimant if they ever start an inquiry into the case or have questions regarding the claim. You should keep records regarding the expenditures for a few years, but you can expect to fill out a report every year that indicates how the funds were spent. If they have questions, an inquiry could get underway and at that time, you may need to provide receipts to back up your statements.

What Can You Spend Back Pay On?

When you receive your back pay for your disability claim, it could be a significant amount. After all, you will be receiving the monthly benefits for the number of months dating back to when you became disabled. It could take 6 months to have your claim approved, and you may have been disabled for more than a year before you filed your claim. You may end up with 17 or 18 months of pay.

If you have struggled financially because of your lack of income while you were waiting for your claim to be approved, you will want to make sure you use your funds wisely. First, you may want to pay off as many bills as possible. You may then want to use funds on the basics, such as groceries, medical care, insurance, and utilities.

What If There Is Extra Money?

If you pay your bills and take care of some necessities and have money left over, you shouldn’t go overboard and waste it. Instead, you should use your funds wisely. You should consider opening a bank account, which draws interest.

That way, you can have your funds put away and be getting interest, which will add to your total cash amount. You will want to put the money in an account so it can be accessed if there is an emergency, such as a vehicle that breaks down and either needs repairs or replacement, or you may have a medical emergency or need to make repairs to your home. You can also use these funds for insurance deductibles in situations when you must file a claim with your health, auto, or homeowners’ coverage.

Remember, emergencies do happen. If you have some extra funds to put away it can be very helpful to your family and can help resolve future financial crisis that you may face.

There are emergencies that require financial resources more often than you think, so having some cash that you can access in such situations can be a real life changer. Check with different banks about interest drawing accounts and learn which would be more suitable for your specific needs.

Consult With a Disability Attorney

If you are unable to work and you are wanting to apply for disability benefits, you should consult with a disability attorney who handles such cases in your area. Your chances of having your claim approved increase greatly when you have a disability lawyer representing you. Disability attorneys work on a contingency basis, so you will not pay anything out of pocket.

Instead, your attorney will receive a percentage – usually 25 percent – of your back pay. They cannot receive more than $6,000 based on laws that pertain to such cases without prior approval from a judge. There are laws in place regarding how much an attorney can receive from the disability benefits that a claimant receives.

Your attorney will help you gather supporting evidence and documentation and will be able to help you get your claim filed in a timely manner. Your attorney can also help you with establishing a representative payee with the SSA. Complete the Free Case Evaluation Form on this page to have the details of your case reviewed by an attorney who handles disability cases in your area.