In past years, disability recipients have usually gotten a small cost of living increase to their Social Security Disability (SSD) or SSI disability benefits each year. The term the federal government uses for cost of living increases is "COLA," which stands for cost-of-living adjustment.
The Purpose of a COLA
The purpose of a COLA is to make sure that inflation (this is what happens when the prices of goods and services rise) leads to your benefits being insufficient to purchase the things you need to live. For example, if during one year goods and services cost twice as much on average as the year before, you will only be able to buy half as many goods and services with the same amount of money.
When Do You Get a COLA?
Each year, the Bureau of Labor Statistics in the federal Department of Labor determines the Consumer Price Index (CPI-W). The CPI-W is a measure of the average change over time in the prices people pay for goods and services. The Social Security Administration (SSA) uses the CPI-W to determine if there will be a COLA.
In order for there to be a COLA in a given year, the CPI-W from the third quarter in the last year that Social Security recipients were given a COLA is compared to the CPI-W from the third quarter of the current year. If the CPI-W has increased by less than 0.05%, or if the CPI-W actually decreased, there will be no COLA. If the CPI-W increased by at least 0.1%, there will be a COLA increase in January of the next year.
Are COLAs Automatic?
COLA increases are automatic. If the CPI-W has increased enough, you will receive a cost of living increase in your benefits. You do not have to ask the SSA or apply for it. People receiving disability benefits will receive the increased benefit starting in January of the year the COLA applies to.
If you are receiving Medicare benefits as well as disability benefits, keep in mind that when there is a COLA increase, some Medicare premiums increase as well.