When calculating the amount of back pay you should expect to receive from the Social Security Administration upon approval of your disability benefits application, it is sometimes difficult to tell the difference between what is back pay and what is actually retroactive pay. In this article we will be discussing the differences between back pay and retroactive pay, as well as why that distinction should matter. We will also be reviewing a list of examples intended to give you a better idea of how back pay and retroactive pay are calculated.
For a more thorough analysis of back and retroactive pay, see our articles on each subject, “Back Pay Overview” and “Retroactive Pay Overview.” Those articles will help you to understand the following distinctions, as well as the accompanying examples.
SSDI back pay is the amount of money that the SSDI owes you from the delay caused by their processing time. Generally, this means that the SSA will pay you from the date of your application (assuming you were eligible on that date) until your application is approved and you begin receiving your checks. This payment amount is known as back pay. Back pay is paid to SSDI applicants so as not to punish you for the amount of time that the SSA takes to process your application. This is especially necessary in light of the lengthy backlog currently delaying the processing of SSDI applications. This delay results in nearly every SSDI applicant being entitled to some amount of back pay.
SSDI retroactive pay, on the other hand, is not paid to everyone, and it is not affected by the SSDI application processing backlog. SSDI retroactive pay is the amount of money that you’re owed for the time that you were disabled before you applied for SSDI. Think of it like this: if back pay is compensation due to the SSA’s delay in processing your application, retroactive pay is compensation for your delay in applying for SSDI. Retroactive pay is a period of up to one year prior to your application date for which the SSA will pay you SSDI benefits, assuming that you were eligible at that time.
As stated above, the SSA will compensate you for up to one year prior to your application date. Therefore, the maximum amount of retroactive pay that you can receive would be one year’s worth of benefits, and that would require you to have been disabled for 17 months or more prior to your application date (due to the 5-month waiting period). See below for more examples of how the 5 month waiting period can affect retroactive pay calculations.
SSDI back pay, on the other hand, has no limit, at least in theory. If it takes 10 years for the SSA to approve your application, but you are eventually approved, then you would be entitled to receive back pay for the ten years since your application date. Hopefully you would not have to experience the frustration of actually having to wait 10 years to be approved for benefits. But the takeaway is that while waiting for your application to be approved can be a real challenge, you can take some comfort in the fact that you will, eventually, be paid all of the benefits to which you are entitled.
On January 1, you are in an accident which leaves you disabled. You are certain your disability will last for longer than 12 months. Therefore, you decide to apply for SSDI benefits right away, and your application is submitted on February 1. Your application is reviewed and the SSA agrees that your disability began on January 1. Your application is approved and you are set to receive benefits beginning December 1.
In the above example, your alleged date of onset (AOD) for your disability is January 1. Because the SSA agrees with your chosen AOD, January 1 becomes your official established date of onset (EOD). Due to the 5 month waiting period, this means that your disability eligibility date is June 1. Therefore, the SSA has determined that you are entitled to benefits from June 1 forward.
You applied for benefits on February 1, but your eligibility for SSDI did not begin until June 1. That means that you are not entitled to receive retroactive pay. However, because your monthly payments are not set to begin until December 1 but you were eligible starting June 1, this means that you will be entitled to receive the payments you are owed from June to December as back pay.
Same scenario as above: you become disabled on January 1. However, you do not apply for SSDI until August 1. The SSA approves your application and agrees with your alleged disability date, and again your monthly payments are set to begin December 1.
In Example B, your AOD is again January 1, and this is also your EOD because the SSA agreed that this is the date you became disabled. Again, your eligibility date is June 1 due to the 5 month waiting period. However, this time, because your eligibility date (June 1) falls before your application date (August 1), you will be entitled to retroactive pay from June-August. And since your payments are not set to begin until December, you would be entitled to back pay from August 1 to December 1.
You begin to feel ill on January 1, and this illness keeps you from working and earning a living. Your disease slowly gets worse, and it is finally diagnosed on September 1. You apply for SSDI on October 1. You use an alleged onset date of January 1, the date when your disease first prevented you from working. The SSA reviews your application and approves it, agreeing with your alleged onset date of January 1. But the application process has moved slowly, and your payments will not begin until the following January 1.
In this example, your AOD is again January 1. This is also your EOD, since the SSA agreed that your disability began January 1. Note that your diagnosis date of September 1 is irrelevant if the SSA agrees that your records demonstrate that your disability actually began at an earlier date.
With an EOD of January 1, you again have an eligibility date of June 1, due to the 5-month waiting period. Because you did not apply for benefits until October 1, you would be entitled to retroactive pay from June-October. And since your monthly benefits will not begin until the following January, you will be entitled to back pay from October 1 to January 1.
Again, you begin to feel ill on January 1, and your disease is diagnosed September 1. You apply for SSDI on October 1. The SSA agrees that you are disabled, but finds that your disease did not actually progress to the point of actually constituting a disability until July 1. Your application is approved and your monthly payments are scheduled to begin the following January.
In this example, while your AOD is still January 1, your EOD is July 1 because that is the date that the SSA determines that your disease actually began to constitute a disability according to the SSA’s definition. With an EOD of July 1, you have an eligibility date of December 1 due to the 5 month waiting period.
Because you applied for SSDI on October 1, prior to your eligibility date, you will not be entitled to retroactive pay. But you will be entitled to back pay from December 1 until your monthly payments begin in January.
You become disabled on January 1, 2010. You are not sure whether your disability will last for 12 months or more, and so you do not apply for SSDI until February 1, 2012. The SSA initially denies your application and you appeal. You finally receive your approval on appeal, and during the appeal the SSA determines that your disability actually began on March 1, 2010. Due to the delayed approval, your monthly benefits are set to begin October 1, 2015.
In this example, your AOD is January 1, 2010. Your EOD is March 1, 2010, as this is the date that your disability was determined to have begun. Therefore, your eligibility date is August 1 2010, due to the 5 month waiting period.
Because your date of eligibility is before your application date, you will be entitled to retroactive pay. But how much? You became eligible for SSDI on August 1, 2010, but you did not apply for SSDI until February 1, 2012. Because this amount of time is longer than one year, you will be entitled to receive the maximum amount of retroactive pay permitted by the SSA – 12 months of benefits.
As for back pay, your application was submitted February 1, 2012 but your application was not approved until much later and you will not begin receiving payments until October 1, 2015. Because this delay was due to the SSA’s application approval process, you will be entitled to back pay for this entire period (2/1/2012 – 10/1/2015).
Please note that these examples are oversimplifications of a complicated process, but we hope they help to demonstrate how your AOD, EOD, and eligibility date are used to calculate your SSDI back pay and retroactive pay.