The 2021 COLA raised SSDI payments by 1.3 percent

Yes, SSDI payments increased in 2021. The Social Security Administration announced a 1.3 percent cost of living adjustment (COLA) that took effect in January 2021. This was the smallest raise in seven years. If you were receiving SSDI in December 2020, your January 2021 payment reflected this increase.

The 1.3 percent figure applied to all SSDI beneficiaries the same way — there was no separate calculation based on how much you received or how long you had been on the program. The raise was automatic; you did not need to request it or contact Social Security.

For context, the 2020 COLA had been 1.6 percent, and the 2019 COLA was 2.8 percent. The 2021 adjustment was lower because inflation — the measure Social Security uses to calculate COLA — was lower in 2020 than in previous years.

Key Takeaways

  • The 2021 COLA of 1.3 percent was applied automatically to all SSDI payments starting in January 2021.
  • COLA is calculated based on inflation data from the third quarter of the previous year, so the 2021 raise reflected economic conditions in mid-2020.
  • The exact dollar amount of your raise depended on what you were receiving in December 2020 — a higher payment meant a larger dollar increase.
  • COLA affects not only SSDI but also Supplemental Security Income (SSI) and Social Security retirement benefits.

How the 1.3 percent increase translated to actual dollars

The 1.3 percent COLA was a percentage, not a flat dollar amount, so the raise varied by person. If you were receiving $1,000 per month in December 2020, your January 2021 payment became $1,013. If you were receiving $1,500, it became $1,519.50.

The Social Security Administration does not publish a single "average" SSDI payment amount that applies to all recipients. Payments depend on your work history, the age at which you became disabled, and other factors. You could find your specific 2021 payment by logging into your my Social Security account online or by calling Social Security at 1-800-772-1213.

If you received a notice from Social Security in December 2020 or early January 2021, it would have shown your new payment amount. If you did not receive a notice and your payment changed, you could contact Social Security to confirm the adjustment was applied.

Why 2021's raise was smaller than previous years

COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation. Social Security calculates the annual COLA using inflation data from July, August, and September of the previous year. For the 2021 COLA, Social Security used inflation data from mid-2020.

In 2020, inflation was low because the economy had contracted sharply in the spring due to the pandemic. Prices for many goods and services fell or stayed flat. By mid-2020, inflation had not yet rebounded, so the CPI-W increase was modest — resulting in the 1.3 percent COLA.

This timing meant that the 2021 COLA did not reflect the higher inflation that emerged later in 2020 and into 2021. The 2022 COLA, announced in October 2021, was much higher at 5.9 percent, because it was based on inflation data from mid-2021 when prices had risen significantly.

What happened to SSI and other benefits in 2021

The same 1.3 percent COLA applied to Supplemental Security Income (SSI) and to Social Security retirement and survivor benefits. All three programs use the same COLA calculation, so recipients across all three programs received the same percentage increase.

However, SSI has a different payment structure than SSDI. SSI is a needs-based program with federal payment limits, and some states add their own payments on top of the federal amount. The 1.3 percent increase applied to both the federal and state portions where applicable.

If you received both SSDI and SSI — which is possible in some circumstances — both payments increased by 1.3 percent in January 2021.

When you would have seen the 2021 raise in your bank account

The 2021 COLA took effect on January 1, 2021. Most SSDI recipients receive payments by direct deposit on the third of each month, so the first payment reflecting the 1.3 percent increase arrived in early January 2021. If you received a check by mail instead of direct deposit, the timing depended on postal delivery.

Social Security sent notices to beneficiaries in December 2020 explaining the COLA and showing the new payment amount. If you were receiving SSDI in December 2020 but did not receive a notice, it may have been mailed to an outdated address on file. You could contact Social Security to request a copy or to update your address.

How COLA affects your benefits going forward

COLA is recalculated every year based on inflation data from the previous year's third quarter. This means your SSDI payment may increase, stay the same, or theoretically decrease each January, depending on whether inflation went up, stayed flat, or went down.

Since 1975, there has been only one year with no COLA — 2010 and 2011 had zero percent adjustments because inflation was flat or negative. In most years, COLA is positive, meaning your payment goes up. The size of the raise varies widely: it has ranged from zero percent to over 8 percent in recent decades.

You do not need to do anything to receive COLA. It is applied automatically to your account each January. Your new payment amount is shown on your Social Security statement, which you can view in your my Social Security account online.

Frequently Asked Questions

Did the 1.3 percent COLA in 2021 keep up with inflation?

No. The 1.3 percent COLA was based on inflation from mid-2020, which was low due to pandemic-related economic disruption. Inflation accelerated later in 2020 and into 2021, so the 2021 COLA did not reflect those higher prices. The 2022 COLA of 5.9 percent was much larger because it was based on inflation from mid-2021.

What if I didn't receive the 1.3 percent increase in January 2021?

Contact Social Security at 1-800-772-1213 or visit your local Social Security office. If you were receiving SSDI in December 2020, the increase should have been applied automatically. If it was not, there may be an error on your account or a change in your status that Social Security needs to review.

Does COLA affect Medicare premiums?

COLA affects your SSDI payment amount, but Medicare Part B premiums are set separately by the Centers for Medicare and Medicaid Services. However, there is a "hold harmless" rule that protects most beneficiaries: if your Medicare premium increase is larger than your COLA increase, Social Security will not deduct the full premium from your benefit. The rules are complex and depend on your specific situation.

Will SSDI payments go up again in 2022?

Yes. The 2022 COLA was 5.9 percent, announced in October 2021 and effective January 2022. This was significantly higher than 2021 because inflation was much higher in mid-2021 than it had been in mid-2020. Each year's COLA is announced in October for the following January.