The 2021 COLA raised SSDI payments by 1.3 percent

In October 2020, the Social Security Administration announced a 1.3 percent cost of living adjustment (COLA) for 2021. This meant that starting in January 2021, people receiving SSDI got a 1.3 percent raise on their monthly payment. The exact dollar amount of that raise depended on what you were receiving in December 2020.

For example, if you were getting $1,000 per month in December 2020, your January 2021 payment would have been $1,013. If you were getting $1,500, it became $1,519.50. The increase was automatic — you did not have to do anything to receive it.

This was a smaller COLA than some years. The year before (2020), the increase had been 1.6 percent. The year after (2022), it jumped to 5.9 percent because inflation had risen sharply.

Key Takeaways

  • The 2021 COLA of 1.3 percent was applied to all SSDI payments starting January 1, 2021, with no action required from beneficiaries.
  • The dollar amount of your raise depended on your December 2020 payment amount — a higher payment meant a larger dollar increase.
  • COLA is calculated based on inflation data from the third quarter of the previous year, so the 2021 increase reflected economic conditions from mid-2020.
  • If you were also receiving Supplemental Security Income (SSI), that program received a separate COLA announcement, though the percentage was the same.

Why the 2021 increase was smaller than expected

The 1.3 percent COLA for 2021 was modest because inflation was low during the months that determined it. The Social Security Administration calculates COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July, August, and September of the previous year. For the 2021 COLA, that meant looking at mid-2020 data — a period when the economy was still adjusting to the pandemic and prices were not rising quickly.

By contrast, 2022 saw a much larger COLA (5.9 percent) because inflation had accelerated by mid-2021. And 2023 brought an even larger one (8.7 percent) as inflation continued to climb. The COLA amount changes every year based on what actually happened to prices, not on what anyone predicted.

How the 2021 increase showed up on your payment

If you received SSDI in 2020, you saw the 1.3 percent increase reflected in your January 2021 payment. You would have received a notice in the mail from Social Security in December 2020 telling you the new amount. The notice, called a "Notice of Benefit Amount," listed your old monthly payment and your new one.

If you were also receiving Medicare or Medicaid, those programs were not affected by the COLA. Your health insurance stayed the same. The increase only applied to your cash benefit — the money deposited into your bank account or sent by check each month.

If you had questions about the amount shown on your notice, you could contact Social Security directly by phone, by visiting a local office, or through your my Social Security account online.

What happened to other SSDI recipients in 2021

Everyone on SSDI received the same 1.3 percent increase in January 2021, regardless of their age, location, or how long they had been receiving benefits. There were no exceptions based on income or other circumstances.

Family members who received benefits based on your SSDI record — such as a spouse or child — also received the 1.3 percent increase on their own payments. The COLA applies to the entire SSDI program, not just to the primary beneficiary.

How COLA affects your other benefits and work incentives

If you were using SSDI work incentives — such as the Student Earned Income Exclusion or the Plan to Achieve Self-Support (PASS) — the COLA did not change how those programs worked. The rules and dollar limits for work incentives are set separately and do not automatically adjust with COLA.

However, if you were tracking your earnings to stay under the Substantial Gainful Activity (SGA) limit, the COLA itself did not raise that limit. The SGA limit is set once per year by Social Security and is based on different economic data than COLA. In 2021, the SGA limit for non-blind individuals was $1,470 per month, which was higher than the 2020 limit of $1,410, but that increase came from a separate calculation.

Frequently Asked Questions

Did I have to do anything to get the 2021 COLA increase?

No. The increase was automatic and applied to everyone on SSDI in January 2021. You received a notice in December 2020 showing your new payment amount, but you did not need to contact Social Security or fill out any forms.

What if I didn't receive a notice about the 2021 increase?

You should have received a "Notice of Benefit Amount" in December 2020. If you did not, you could contact Social Security by phone at 1-800-772-1213, visit a local office, or check your my Social Security account online to confirm your payment amount for January 2021.

Does COLA explore to SSI as well as SSDI?

SSI (Supplemental Security Income) received the same 1.3 percent COLA for 2021, though SSI and SSDI are separate programs with different rules. If you received both, each one increased by 1.3 percent.

Will the COLA be the same every year?

No. COLA changes every year based on inflation. The 2021 increase was 1.3 percent, but 2022 was 5.9 percent and 2023 was 8.7 percent. Social Security announces the new COLA in October of each year, and it takes effect in January.

Does the COLA increase affect my Medicare premiums?

Medicare Part B premiums are deducted from your SSDI payment, but the COLA increase itself does not automatically raise your premium. However, Medicare Part B premiums can change year to year for other reasons, and those changes are announced separately by Medicare.