The law does allow for offset of retroactive Social Security benefits in the amount of SSI that would not have been paid if the Social Security had been paid on time. It is called windfall offset. SSI is Supplemental Security Income. The retroactive benefits are computed on the amount of income you actually received. The windfall offset is based on the amount of SSI that was paid MINUS the amount of SSI that would have been paid if the Social Security was paid on time. Read that sentence many times until you understand it.

Windfall offset happens in 100% of the claims in which there is both retroactive SSI and Social Security for the same months.

How much SSI was paid to you or is still owed to you? You cannot have windfall offset that exceeds the amount of SSI paid or owed (if there are installment payments still outstanding).

Did your state put a levy on your Social Security benefits? Or is there a garnishment? I am a bit confused about owing the state trustee money unless you are referring to your county's interim assistance (AK general assistance, general relief, some locally funded program for the indigent). And, unless you got $37,000 in SSI benefits, I can't figure out how you could have a windfall offset that would reduce $42,246 to $5,937. So there much be more to this situation.

The decision about whether or not you are disabled was appealable and I assume you got a favorable decision by an ALJ. The decision about the amount of your payment is also appealable, but you have to go up the ladder again, starting with a request for reconsideration by your local office (or payment center since you disagree with the Social Security amount) and if that is unfavorable, you can again request a hearing before an ALJ. The previous favorable hearing decision only was a decision that you were disabled and the date you became disabled. It was not a payment decision. If you read the whole thing, there should be a paragraph about computation of benefits being done by a different component. So, you cannot go above the ALJ on the payment computation without a recon and then another request for hearing.

I think the best solution is to see if you can get an appointment with your local office's SSI windfall offset expert. You still may not like the outcome, but you may understand it better. You can still appeal within 60 days of the date of the notice. You can't jump up to District Court.

Here's a Ruling

http://www.socialsecurity.gov/OP_Hom...9-oasi-41.html

Here's something a little less legalese

http://www.socialsecurity.gov/OP_Hom...book-2185.html

Here's the local office instructions

https://secure.ssa.gov/apps10/poms.nsf/lnx/0502006000