Yes, SSDI payments went up 1.3% in 2021

Social Security Disability Insurance (SSDI) payments increased by 1.3% in 2021, based on the Cost of Living Adjustment (COLA) announced in October 2020. The average SSDI payment rose from $1,194 per month in 2020 to $1,211 per month in 2021. This was one of the smallest increases in recent years — the 2020 COLA was 1.6%, and the 2019 COLA was 2.8%.

The increase applied automatically to all SSDI beneficiaries on their January 2021 payment. You did not have to do anything to receive it. If you were receiving SSDI in December 2020, your January 2021 payment reflected the higher amount.

Key Takeaways

  • The 2021 COLA of 1.3% meant the average SSDI payment increased by about $17 per month, though your individual increase depended on your specific benefit amount.
  • COLA is calculated by the Social Security Administration based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year.
  • The increase applied to all SSDI beneficiaries automatically in January 2021 with no action required on your part.
  • Even with the COLA increase, 2021 was a year of historically low cost-of-living adjustments, reflecting relatively flat inflation in the economy.

How the 2021 COLA was calculated

The Social Security Administration calculates COLA each year using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures the average change in prices paid by urban workers for goods and services over time. The SSA compares the CPI-W for the third quarter (July, August, September) of the current year to the third quarter of the previous year. If prices rose, beneficiaries receive a COLA increase. If prices fell, there is no COLA — this happened in 2009 and 2010, when beneficiaries received no increase.

For 2021, the CPI-W showed a 1.3% increase from the third quarter of 2019 to the third quarter of 2020. This modest increase reflected economic conditions during the early months of the COVID-19 pandemic, when inflation remained low. The SSA announced the 2021 COLA in October 2020, giving beneficiaries advance notice before the increase took effect in January.

What your individual increase depended on

While the COLA percentage was 1.3% for everyone, the dollar amount you received depended on your specific benefit amount. If your SSDI payment was $1,000 per month in 2020, your increase was about $13. If your payment was $1,500 per month, your increase was about $20. The SSA applies the same percentage to every beneficiary's current payment amount, so higher payments received larger dollar increases.

Some beneficiaries received less than the full 1.3% increase due to the Government Pension Offset (GPO) or Windfall Elimination Provision (WEP). These rules reduce SSDI payments for people who also receive pensions from work not covered by Social Security, such as certain government jobs. If you fell under either rule, your COLA increase may have been smaller or nonexistent.

How 2021 compared to other recent years

The 2021 COLA of 1.3% was among the lowest in the past two decades. The 2020 COLA was 1.6%, the 2019 COLA was 2.8%, and the 2018 COLA was 2.0%. Going back further, the 2017 COLA was 2.0%, the 2016 COLA was 0.3% (the lowest since the automatic COLA began in 1975), and the 2015 COLA was 1.7%. The years 2009 and 2010 had zero COLA increases because the CPI-W actually declined during those periods.

The low 2021 increase reflected the economic environment of 2020, when inflation remained subdued despite government spending and stimulus measures. By late 2021 and into 2022, inflation began rising more sharply, which led to much larger COLA increases in subsequent years — the 2022 COLA was 5.9%, and the 2023 COLA was 8.7%, the largest in four decades.

SSDI payments and other benefits you received

If you were receiving SSDI in 2021, the COLA increase applied only to your SSDI payment itself. However, if you were also receiving Medicare, the increase did not affect your Medicare premiums in the same way. Medicare Part B premiums are held harmless for most beneficiaries, meaning the premium cannot increase more than the COLA increase. In 2021, the Part B premium actually stayed flat at $148.50 per month for most people, even though SSDI payments rose.

If you were receiving Supplemental Security Income (SSI) in addition to or instead of SSDI, you received a separate COLA increase to your SSI payment. SSI is a needs-based program with its own payment structure, though it uses the same COLA percentage as SSDI. If you were receiving both programs, each payment increased by 1.3%.

What happened to the federal benefit rate in 2021

The federal benefit rate (FBR) for Supplemental Security Income also increased by 1.3% in 2021. The FBR is the maximum monthly payment the federal government provides to SSI beneficiaries with no other income. In 2020, the FBR was $794 per month for an individual and $1,191 for a couple. In 2021, these amounts increased to $794 and $1,191 respectively — though the actual dollar increase was small because the percentage was low.

States that supplement the federal SSI payment also adjusted their supplement amounts based on the COLA. The amount of the state supplement varies by state and by living situation (living alone, living with others, living in a group home). If you received SSI and a state supplement, both portions of your payment increased in January 2021.

Frequently Asked Questions

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

No. The COLA increase was automatic. If you were receiving SSDI in December 2020, your January 2021 payment automatically included the 1.3% increase. You did not need to contact Social Security or submit any paperwork.

Why was the 2021 COLA so low compared to 2022 and 2023?

The COLA is based on inflation during a specific period — the third quarter of the previous year. In 2020, inflation was low due to the early pandemic economy. By 2021 and 2022, inflation had risen sharply, leading to much larger COLA increases in those years. The COLA you receive in any given year reflects economic conditions from the prior year, not the current year.

If I started SSDI in 2021, did I get the full 1.3% increase?

If you started SSDI before January 2021, you received the full 1.3% increase in your January payment. If you started SSDI in January 2021 or later, your initial payment already reflected the 2021 benefit amount, so there was no separate increase to explore.

Does the COLA increase affect how much I can earn while working?

The COLA does not directly affect your work incentive limits. However, other limits tied to the federal benefit rate — such as the Substantial Gainful Activity (SGA) threshold — do increase with COLA. In 2021, the SGA limit was $1,310 per month. These limits change each year based on COLA, so your ability to work and keep benefits may shift annually.