Yes. You get automatic cost-of-living increases when you are on disability. A cost-of-living adjustment (COLA) is available to everyone who receives benefits from a Social Security program, including Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and retirement.
What is a COLA? What does it do?
The COLA adjustment is a small increase in benefits to make sure your income keeps pace with inflation (i.e., the gradual upward hike in how much things cost over time). The purpose of the COLA is to enable recipients of disability benefits to afford the things they could buy before inflation caused them to become more expensive.
These adjustments have been part of United States law since the mid-1970s when lawmakers amended the original Social Security Act of 1935 that established the program. Before that, benefits under Social Security programs did not automatically increase along with inflation and would require action from Congress each time an adjustment was necessary.
Does the adjustment happen every year?
Not always. The SSA bases the COLA on an analysis of the Consumer Price Index for Urban Wage Earners (CPI-W) by the federal Bureau of Labor Statistics within the Department of Labor. The CPI-W measures changes in what Americans spend on normal goods and services, such as groceries, clothing, rent, transportation, education, and recreation.
The intent is to provide a glimpse of typical expenses for an ordinary household. If there is an increase in the CPI-W between the third quarter of the most recent year there was a COLA and the third quarter of the current year, there will be an adjustment.
Increases to the CPI-W usually do justify a benefit adjustment. The last time this did not happen was in 2015. There also were no adjustments in 2009 and 2010, following the financial crisis that led to the Great Recession, since the CPI-w did not expand enough in those years to justify a COLA.
How does the SSA calculate the COLA?
The SSA has a specific formula to calculate the COLA. According to the SSA, the COLA is “the percentage increase (if any) in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA became effective.”
In plain English, this means that the SSA simply takes the CPI-W of the current year and divides it by the average for the third quarter of the last COLA year. The SSA then rounds whatever number it comes up with to the nearest tenth of a percent.
The SSA includes an example of how it came to the decision for 2016:
The base average for 2014 (the last year a COLA was effective): 234.242
The CPI-W for the third quarter of 2016: 235.057
Because the CPI-W is higher than the average from 2014, the SSA subtracts it before dividing.
(235.057-234.242)/234.242 x 100=0.3479
The COLA, rounded: 0.3 percent
When does the COLA take effect?
If the government determines third-quarter growth justifies an adjustment, the increase will happen on January 1 of the next year. This will happen automatically. In other words, there is no extra paperwork for you to fill out in order to claim a COLA in your disability benefits.
How much is the increase to my benefits?
The percentage of the adjustment corresponds to growth in the CPI-W. The most recent COLA took effect in January 2017. The increase of 0.3 percent reflects CPI-W growth in the period measured. Since there was no increase in 2015, the government based its calculation on CPI-W growth between the third quarters of 2014 and 2016.
The average SSDI benefit in 2016 was $1,166 per month. Adding a COLA of 0.3 percent puts just a few extra few dollars into each check, but with inflation likely to pick up as the economic rebound continues, disability recipients can expect to a receive bigger adjustments in the coming year, according to The Motley Fool.
Do I need a lawyer?
You do not need a lawyer to get a COLA if you are already receiving disability benefits as the increase is automatic, but if you are filing an initial claim, attempting to recover more benefits, or filing an appeal, it is a good idea. Getting the benefits you deserve can be a complicated process, and turning to a lawyer who handles disability claims will simplify the process.
The disability attorneys at Ogle, Elrod & Baril, PLLC have worked for years representing claimants at every step of the SSDI application and appeals processes. Our lawyers will know how to present the best case for obtaining the benefits you need by compiling medical records, seeking expert opinions, preparing you for your disability appeal hearing, and arguing on your behalf.
Call 865-566-0800 today to set up a free consultation and get the benefits you need.