What’s the Difference Between Back Pay and Retroactive Pay?

Government programs can be helpful yet confusing to fully understand. Sadly, this makes it harder to understand the different benefits that you could potentially get. Two popular programs that can help those in need include Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Understanding these programs can be tricky! However, it doesn’t have to be. There are basics you should know about these programs as well as potential benefits.

Understanding SSDI and SSI

Before understanding the different benefits of these opportunities, you want to make sure you know what these programs are! Let’s start with SSDI. This is a program that is only able to provide support to those that have an eligible work history and disability. On the other hand, another program that can help those in need is SSI. SSI is a program that can give support to those that meet income requirements that are either a specific age or have a qualifying disability. The biggest difference between these two programs is easy to understand: SSI is a program that focuses on age or disability and limited income while SSDI is a program that focuses on disability and work credits. They are similar yet very different!

What’s the Difference Between Back Pay and Retroactive Pay?

When learning about these two programs you may come across the terms retroactive benefits and back pay. Understanding the difference between these two terms is important because not each of them impacts these programs in the same way!

Retroactive Benefits

Let’s start with retroactive benefits regarding SSDI. Retroactive pay is the support that the Social Security Administration (SSA) will pay recipients for any eligible timeframe that the recipient was disabled before filing an SSDI application. There are times when an SSDI applicant won’t submit their application right away.

There are many reasons that a person could hold off on their application, but it’s important to keep in mind that for a disability to qualify, it must be expected to last a minimum of 12 months. With that in mind, some applicants may wait until their disability has been around for 12 months or until they expect their disability to last for 12 months. Regardless, if an applicant is found that they could have qualified for benefits before the time of their application, then they will be entitled to retroactive benefits. Three factors determine how much retroactive pay a person could get:

  • Application Date
  • Disability Onset Date
  • Five-Month Waiting Period

Application Date

The application date is important because the amount is meant to compensate recipients for the time they were able to get SSDI benefits before they applied. To determine your application date, you will need to see when you applied to SSDI. That date will be important to remember!

Disability Onset Date

Your disability onset date looks at the date that you became disabled, according to the SSA definition of a disability. This date will either be the date that you claimed to have become disabled or the date that the SSA determined that you had become disabled. This won’t necessarily be the same date because when you submit your SSDI application, you will be required to provide your Alleged Onset Date (AOD). This date is what the SSA will use to determine how long you have been disabled.

They will look at your medical information and other documentation to see if you were able to show proof that the AOD you provided was accurate. If the SSA agrees with your AOD after checking the documentation you provided, it will become your Established Onset Date (EOD). However, if they don’t see that your documentation shows proof that your AOD is accurate, then your EOD will be a date that the SSA selects. Regardless, the EOD is what will be important when it comes to retroactive pay!

Five-Month Waiting Period

Finally, the five-month waiting period will go into consideration when determining your retroactive pay. That’s because once the disability onset date has officially become an EOD, recipients will need to wait for a total of five months after that date to qualify for benefits. This five-month waiting period applies to every SSDI benefit recipient. For example, let’s say your EOD is on January 1st, 2022. You wouldn’t be eligible to receive benefits until five months after that date.

How Much Can You Get from Retroactive Pay?

The SSA has set a limit to retroactive benefits which is 12 months. That means you can’t expect the SSA to pay for all of the time you waited to apply for SSDI. For example, let’s say you became disabled and applied for SSDI support 5 years later. They will not be able to pay for that entire time. If you wanted to get the most retroactive benefits, you would have needed to be disabled at least 17 months before you apply. That’s because the SSA would deduct the five-month waiting period and then pay for the maximum of 12 months. Any other time passed the 12-month limit (and the five-month waiting period which totals 17 months) wouldn’t be compensated.

Back Pay

Now that you know what retroactive pay is, it is important to understand back pay when it comes to SSDI. The application process for SSDI can take a long time. Sadly, that’s why a lot of people who apply for the program are owed some back pay by the time the approval of their application goes through. It is the amount of SSDI support that a recipient is entitled to from the date of their application until the month that the recipient is approved for those payments. The average time it takes for an SSDI application to process is three to 6 months. Due to this processing time, applications will find that they may be due back pay. The amount of back pay they will get depends on the following three factors:

  • Application Date
  • Disability Onset Date
  • Five-Month Waiting Period

Application Date

The application date is important and easy to figure out. It refers to the date that you submitted your SSDI application. It will be important when calculating your back pay because your back pay looks at compensating you from your application date until you receive approval for benefits.

Disability Onset Date

Your disability onset date looks at the date that you became disabled, according to the SSA definition of a disability. This date will either be the date that you claimed to have become disabled or the date that the SSA determined that you had become disabled. Again, this won’t necessarily be the same date! That’s because when you submit your SSDI application you will be required to provide your Alleged Onset Date (AOD). This date is what the SSA will use to determine how long you have been disabled.

They will look at your medical information and other documentation to see if you were able to show proof that the AOD you provided was accurate. If the SSA agrees with your AOD after checking the documentation you provided, it will become your Established Onset Date (EOD). However, if they don’t see that your documentation shows proof that your AOD is accurate, then your EOD will be a date that the SSA selects. Regardless, the EOD is what will be important when it comes to back pay!

Five-Month Waiting Period

Finally, the five-month waiting period will go into consideration when determining your back pay.  Once the disability onset date has officially become an EOD, recipients will need to wait a total of five months after that date to qualify for benefits. This five-month waiting period applies to every SSDI benefit recipient. For example, let’s say your EOD is on January 1st, 2022. You wouldn’t be eligible to receive benefits until five months after that date.

How Much Can You Get from Back Pay?

What’s cool about back pay is that there is no maximum. When it comes time to receive your back pay, it will be provided in the form of a lump sum payment. On average, recipients wait between one month to two months before getting their back pay.

What About Back Pay and Retroactive Pay for SSI?

All of the information above discusses back pay and retroactive pay for SSDI. However, for SSI, it’s a little different. The biggest difference is the fact that there is no retroactive pay for SSI. That’s because individuals who qualify are only able to receive benefits based on the initial date of the application. However, there is back pay for SSI. Back pay for SSI will look at the application date. It doesn’t come along with a waiting period so the back pay calculation will be different from SSDI. Also, if the amount of back pay is larger than the maximum monthly benefit of $841 (this number is for 2022) then recipients wouldn’t get the back pay in a lump sum. Instead, they would get it in three installments over the course of six-month intervals.

Bottom Line

There are a variety of support opportunities available to help those in need. Two options, in particular, are Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). These programs can provide support in different ways. When it comes to SSDI, two benefits include retroactive pay and back pay. When it comes to SSI on the other hand, one specific benefit is back pay. SSI does not provide retroactive pay.

Retroactive pay looks at providing benefits during a period when you were disabled before applying for disability benefits. Back pay looks at the time between the date of your application versus the date you were approved to receive benefits. They are different yet important to keep in mind.

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