- Back pay is a lump-sum payment that covers the time between the date Social Security established as when you were initially disabled and the date you began receiving regular monthly benefit checks. Back pay merely allows you to collect payment for months when you were disabled but had not been approved yet. Social Security puts some limitations on how much back pay you can get. You cannot be paid for more than one year back in time before you became disabled, and you won't be paid for the first five months after your disability started.
- The check that is disbursed as a lump sum back pay amount is equal to your approved monthly benefit amount multiplied by the number of months you were eligible to be paid before being officially approved. The amount can often run into thousands of dollars but has no effect on the amount of your monthly benefit check going forward. Remember, that part of your back pay might be taxable depending upon the amount and your personal financial situation and marital status.
- Your monthly check amount is based on how much you worked and earned in the past. There is a certain base amount that will be paid if you have no other sources of income. If you do have additional income, your disability check will be reduced incrementally once it exceeds a certain level, termed "substantial work." In general, work is considered substantial if it is more than $720 monthly, and you definitely should report it to Social Security if you earn more than $1,000 in a single month.
- If you have qualified for SSD and are expecting to receive a back-pay check, there is no need to be concerned that it will reduce your monthly benefit amount going forward. The only way that will happen is if your condition improves to the point where you are able to work again or you perform substantial work for nine months over a period of five years, which is considered successful completion of a trial work period.
next post