Lump Sum Payments

When you hear the term “lum sum” payment or “back benefit” payment, these phrases refer to the payments for past due benefits that an SSDI or SSI claimant can receive.  In my practice, I frequently represent clients who receive $20,000, $30,000 or more when their cases are approved.

While it would obviously be nice to receive a check for $30,000 in the mail, you have to remember that the reason why these past due benefit checks are so large has to do with the long delays it may take your claim to work through the system.

For example, in the Atlanta area, it can take two to three years from the time a person applies until he is approved and receives his check. It takes this long because Social Security Administration employees  are overworked and because thousands upon thousands of people apply every day and each claim must be evaluated.

Example of Past Due Benefit Calculation

Here is an example of how the lump sum payment system works using the facts of a recent case I tried and won. Tony was a long-time employee of a local college who worked as a steam mechanic.  On the weekends, Tony and his adult son made extra money installing gutters on houses.  In August, 2006, Tony and his son were installing gutters on the second floor of a large house.  The ladder on which Tony was standing gave way and Tony fell 20 feet onto a concrete pad.

Tony continued to work at the college for about six months before the pain became too overwhelming and he retired in March, 2007.  Since his accident, Tony has had 3 back surgeries and currently is treating with a pain management physician. Tony applied for benefits in April 2007 and used March 15, 2007 as his “onset date.”

The hearing in Tony’s case was held in December, 2010, and he was approved for benefits based on his onset date of March 15, 2007.  Tony will be paid past due benefits as follows:

March 15- July 31, 2007 – no benefits paid – SSDI benefits are subject to a 5 month waiting period

August 1, 2007 – December 31, 2007 – $1,500 per month x 5 months = $7,500.00.

January 1, 2008 – December 31, 2008 – $1,550 per month x 12 months = $18,600.

January 1, 2009 – December 31, 2009 – $1,575 per month x 12 months = $18,900.

January 1, 2010 – November 30, 2010 – $1,575 per month x 11 months = $17,325.

December 1, 2010 – on-going – SSDI payments adjusted yearly for inflation

Total past due benefits payable to Tony: $62,325.  My fee, as Tony’s lawyer, was 25% of these past due benefits with a limit of $6,00.  So, Tony will receive a lump sum of $56,325.

Obviously, your lump sum payment may be different than Tony’s. The factors that come into play include the amount of your monthly benefit and the number of months you have to wait for an approval of your case.

Increased Importance of Your Administrative Law Judge Hearing

Because you can end up waiting two to three years for your Administrative Law Judge hearing, you should do everything in your power to improve your chances at winning at the hearing level.  While you can appeal an unfavorable hearing decision, your chances of a successful appeal before the Appeals Council are small.

Obviously, I practice Social Security disability law and I hope that you will consider my firm to represent you.  But whether you choose me or another lawyer, I urge you to avoid the temptation of appearing at your hearing without counsel.  If you will be waiting two to three years for your first chance to be heard, and tens of thousands of dollars is at stake, it makes little sense to put yourself in an unfamiliar hearing setting with a busy judge you do not know in a procedure driven system.