Receiving a disability benefit is intended to replace the income that you would otherwise receive from working. Much like a salary or an hourly wage, most people experience an increase as the cost of living rises.

Some benefits do receive cost-of-living increases due to inflation. Without it, there would be no protection from the effects of inflation, leaving recipients with a substantial decrease in purchasing power. This includes these programs from Social Security:

• Old-Age
• Survivors
• Disability Insurance

They are collectively known as OASDI. Disability benefits also see an occasional small cost-of-living adjustment (also called COLA).

Calculating The COLA

COLA increases are determined in two steps to establish if a COLA is warranted for the year.

First, The Department of Labor’s Bureau of Vital Statistics does a yearly assessment of the Consumer Price Index Urban Wage Earners and Clerical Workers, known as CPI-W. This number represents the change in what people pay for goods and services over time.

The Social Security Administration reviews the third-quarter CPI-W rate (July, August, and September) from the year when recipients were last given a COLA increase. Social Security then compares that number to the current year’s third-quarter CPI-W. if there is an increase of at least .01% in the CPI-W, recipients begin receiving a COLA increase in the following January. If the number is less than .05%, or the CPI-W decreased, no COLA is given.

COLA is an automatic raise, so recipients don’t have to apply for or request anything.

The COLA for 2020 is 1.6% for both Social Security and SSI benefits. This translates to $12 for an individual and $18 for a couple where both are eligible.

The average increase for SSDI recipients averages about $20, but the total will ultimately depend on a person’s lifetime earnings.

 2021 COLA

The current planned COLA for 2021 is 1.3%, representing the recent lower rate of inflation. This will increase monthly checks by:

• $20 per month for the average retired worker
• $33 per month for the average retired married couple
• $16 per month for the average disabled worker
• $137 per month maximum for the person retiring at full retirement age

There are similar raises planned for individuals who receive SSI.

Emergency Social Security COLA for 2021 Act

Shortly after the COLA announcement, two lawmakers have proposed an emergency raise to 3% for recipients due to COVID-19. Co-sponsors Rep. Peter DeFazio, D-OR, and Rep. John Larson, D-CT introduced House Bill 8598. If approved, it is intended to give recipients a 3% increase in monthly benefit to help offset the extra expenses due to COVID-19.

New Jersey congressmen Chris Smith and Jeff Van Drew have introduced a similar bill (H.R. 8600, The COVID-19 Emergency Social Security Cost of Living Increase Act of 2020 ) that would not only raise the COLA for 2021 to 3%, but would guarantee that subsequent COLAs would be no less than 3%.

H.R.8600 would also change the formula for calculating the COLA from the current CPI-W to a “Senior CPI,” which takes into account the expenses that are more common to seniors.

Neither bill has any additional action since its introduction into the House.

Let Herren Law Help You With Your Disability Claim

We’ve helped over 4,000 Houstonians get their disability benefits. The Herren Law Firm in Houston, TX can assist with your application, appeals, and records gathering to prove your case, and win your claim. Contact us today at 713-682-8194 (or use our online contact form) to schedule your free consultation. There’s no obligation and no up-front fees, and we only collect a fee if we win your case.