The 2020 COLA increased SSDI payments by 1.6 percent

Social Security announced in October 2019 that the 2020 cost-of-living adjustment (COLA) would be 1.6 percent. This meant that starting in January 2020, the average SSDI payment rose by that percentage. For someone receiving $1,200 per month, the raise amounted to about $19 more each month.

The 1.6 percent figure was lower than the previous year's 2.8 percent adjustment. COLA is calculated by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the previous year. When inflation is low, the adjustment is low. When inflation is high, the adjustment is higher.

This was not a one-time payment. The raise became part of your ongoing monthly benefit amount. If you were receiving SSDI in January 2020, you saw the higher payment automatically deposited without having to request anything.

Key Takeaways

  • The 2020 COLA was 1.6 percent, meaning SSDI payments increased by that amount starting January 2020.
  • COLA is determined by measuring inflation using the Consumer Price Index and is calculated the same way for all Social Security beneficiaries.
  • The adjustment applies automatically to your monthly payment; you do not need to request it or take any action.
  • COLA amounts vary year to year depending on inflation, so future raises may be larger or smaller than 1.6 percent.

How the 1.6 percent raise was calculated

Social Security uses a specific inflation measure to set COLA each year. The agency compares the average CPI-W for July, August, and September of the current year to the average for the same three months of the previous year. If there is an increase, that percentage becomes the COLA. If there is no increase, COLA is zero — benefits do not go down.

For 2020, the CPI-W showed a 1.6 percent increase from the third quarter of 2018 to the third quarter of 2019. This reflected modest inflation during that period. The calculation is the same whether you receive SSDI, Supplemental Security Income (SSI), or retirement benefits. Everyone on Social Security gets the same percentage raise.

The announcement happens in October each year, and the raise takes effect the following January. This timing gives Social Security time to reprogram payment systems and notify beneficiaries before the new amount hits their bank account.

What the 2020 raise meant in real dollars

The actual dollar amount of the raise depended on how much you were already receiving. Someone getting the average SSDI payment of around $1,194 per month in 2019 received an additional $19 in January 2020. Someone receiving $2,000 per month got about $32 more. Someone receiving $800 per month got about $13 more.

The raise applied to your primary insurance amount — the base benefit calculated from your work history. If you were receiving a reduced benefit because you claimed before full retirement age, or an increased benefit because you delayed claiming, the 1.6 percent applied to your actual payment amount, not the underlying calculation.

For beneficiaries also receiving Medicare, the raise did not change your Medicare premium directly. However, Social Security uses a "hold harmless" rule that protects most beneficiaries from premium increases. The 2020 Medicare Part B premium remained stable for most people, meaning more of the COLA went into your pocket rather than toward healthcare costs.

Why 2020's raise was smaller than some years

The 1.6 percent COLA in 2020 was the third-smallest adjustment since automatic COLA began in 1975. The years 2010, 2011, and 2016 all had zero COLA because inflation was flat or negative. The 2008 financial crisis and the 2020 pandemic both occurred in years with modest adjustments because inflation had not yet risen significantly.

By contrast, 2022 saw an 8.7 percent COLA — the largest in four decades — because inflation spiked after pandemic-related supply chain disruptions. The 2020 adjustment reflected the economic conditions of mid-2019, when inflation was running below the Federal Reserve's 2 percent target.

COLA is not something Congress votes on or Social Security administrators choose. It is a mathematical result of how inflation actually measured out during the specific months used in the calculation. If you wanted a larger raise, the only way that happens is if the economy experiences higher inflation — which brings its own costs to people on fixed incomes.

How the 2020 raise affected your taxes and benefits

For most SSDI beneficiaries, the raise had no effect on federal income taxes. SSDI is not taxable income for most people. You only pay tax on SSDI if your combined income (SSDI plus other income) exceeds certain thresholds, and those thresholds do not change with COLA.

If you were receiving both SSDI and Supplemental Security Income (SSI), the raise applied to both programs. However, SSI has a resource limit of $2,000 for individuals and $3,000 for couples. If you had savings near that limit, the extra $19 or $32 per month did not push you over the edge — your resources are what matter for SSI, not your income.

If you were working and receiving SSDI under a work incentive program, the raise did not change your earnings limit. The Substantial Gainful Activity (SGA) limit — the amount you can earn before Social Security reviews your case — is set separately and did not increase in 2020.

Comparing 2020 to other recent years

The 2020 COLA of 1.6 percent fell in the middle range of recent adjustments. Here is how it compared:

  • 2019: 2.8 percent
  • 2020: 1.6 percent
  • 2021: 1.3 percent
  • 2022: 8.7 percent

The three-year period from 2019 to 2021 saw relatively modest adjustments as inflation remained low. The jump to 8.7 percent in 2022 was unusual and reflected a sharp change in economic conditions. Future COLA amounts will continue to depend on inflation measured during the specific months Social Security uses in its calculation.

Frequently Asked Questions

Did I have to do anything to get the 2020 raise?

No. The raise was automatic. If you were receiving SSDI in January 2020, the new amount appeared in your bank account or payment method without any action on your part. Social Security does not require you to request COLA or file any paperwork.

What if I started receiving SSDI after January 2020?

Your initial benefit amount was calculated using the 2020 benefit formula, which already included the 1.6 percent COLA. You did not receive a separate raise because you were not yet on the rolls when the adjustment took effect. Your first raise would come in January 2021.

Did the 2020 raise affect my Medicare or Medicaid?

The raise did not change your Medicare coverage or Medicaid status. Most Medicare beneficiaries were protected from premium increases by the hold harmless rule, so more of the COLA stayed in your pocket. Medicaid is run by states, and SSDI income limits vary by state, but a 1.6 percent raise rarely triggered a loss of coverage.

Can I find out what my specific raise was in dollars?

Yes. Your Social Security statement shows your benefit amount for each year. You can compare your January 2019 payment to your January 2020 payment to see the exact dollar increase. You can also create a my Social Security account at ssa.gov to view your payment history online.

Will future COLA raises be bigger than 1.6 percent?

That depends on inflation. COLA is calculated automatically based on the Consumer Price Index, so there is no way to predict it in advance. Some years will be higher, some lower, and some may be zero if inflation is flat or negative.