People who gain benefits through the Social Security Administration (SSA) may have heard before of the Cost of Living Adjustment, also known as COLA. The COLA has a significant impact on the amount of money that people with Social Security benefits receive, including those who get disability benefits. But what exactly is it, and how does it impact recipients of benefits like Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI)?
Explaining the Cost of Living Adjustment (COLA)
The Cost of Living Adjustment is, in simple terms, the amount that Social Security payments are increased every year to compensate for increases in the cost of living. The COLA calculation includes increases in the cost of living due to inflation, increases in housing costs, increases in food prices, and other expenses that might impact how much people might need to live. The higher the cost of living goes up, the greater the COLA that will be applied.
Why Does the COLA Exist?
The COLA exists to allow Social Security to automatically increase the payments to recipients of Social Security benefits without needing to get separate legislative approval. It is applied automatically by the SSA, without need for additional administrative procedures or legal processes. This is beneficial to people who receive these benefits, because they know their payments will keep up with their own increasing costs.
The COLA in 2021
The COLA increased by an unusually low 1.3% in 2021, the result of a number of economic factors that have slowed the increase in the cost of living. This is compared to a 1.6% increase in 2020, and an unusually large increase of 2.8% back in 2019. Much of this relatively small COLA can be attributed to factors caused by the pandemic, which resulted in a drop in the Consumer Price Index compared to previous years.
How Does the COLA Affect SSDI and SSI Recipients?
For SSDI and SSI recipients, who are unable to work to support themselves, the COLA is a crucial tool to ensure they continue to receive the benefits they need to survive. Without it, their benefits would slowly slip further behind as the cost of living went up. With the COLA, they can be certain that the payments they receive will not be outpaced by their expenses.
If you or a loved one need assistance applying for SSDI or SSI benefits, it is important that you seek the guidance of an experienced Social Security Disability benefits lawyer. The lawyers at Sullivan & Kehoe, LLP have over 50 years of combined experience between its attorneys and are available to you or your loved one in obtaining Social Security Disability or Supplemental Security Income benefits. To schedule a consultation with our New York Social Security Disability benefits lawyers, call (631) 823-7155.