In most years, disability recipients receive a small cost-of-living increase to their Social Security disability insurance (SSDI) 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 is to make sure that inflation (this is what happens when the prices of goods and services rise) doesn't lead to your benefits being insufficient to purchase the things you need to live. For example, if one year the cost of goods and services were to cost twice as much on average as the year before, you would only be able to buy half as many goods and services with the same amount of money.
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.
The COLA this year (2021) is 1.3% for all Social Security and Supplemental Security Income (SSI) benefits. The maximum federal SSI payment is increasing $11 per month for an individual and $16 per month for a couple (where both spouses are eligible for SSI).
Exact increases for Social Security disability benefits (SSDI) amounts depend on the lifetime earnings of the recipients, but the average increase for an SSDI recipient is $16 per month in 2021.
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 SSDI benefits will receive the increased benefit starting in January of the year the COLA applies to, while people receiving SSI will get their first increased payment in December of the year before. (For instance, SSI recipients will get their first increased payment due to the 2021 COLA on December 31, 2020.)
Updated May 13, 2021