What a COLA is and how it changes your SSDI payment

A Cost of Living Adjustment (COLA) is an annual increase to your SSDI payment meant to keep pace with inflation. The Social Security Administration calculates it each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures price changes for food, housing, energy, and other goods. If inflation rises, your payment rises with it. If there is no inflation or prices fall, there is no COLA that year—this has happened only three times since 1975.

The COLA percentage is the same for everyone on SSDI, Supplemental Security Income (SSI), and Social Security retirement benefits. It is not based on your individual circumstances, your work history, or how long you have been receiving benefits. A person who started SSDI last month gets the same percentage increase as someone who has been on the program for twenty years.

The increase is automatic. You do not need to do anything to receive it. Social Security applies the new payment amount to your account in January, and you will see the higher amount in your next payment.

Key Takeaways

  • COLA is calculated once per year using inflation data and takes effect in January for all beneficiaries at the same time.
  • The percentage increase is identical for all SSDI recipients and is based on national inflation, not individual need or circumstances.
  • Social Security announces the COLA percentage in October for the January increase, so you will know the new amount before it arrives.
  • In years with no inflation, there is no COLA increase—your payment stays the same as the previous year.
  • If you are also receiving Medicare, your Part B premium may increase in the same year, which can offset some or all of your COLA increase.

When the COLA takes effect and how to find out the amount

Social Security announces the COLA percentage in mid-October each year. The increase then goes into effect on January 1 of the following year. For example, the 2024 COLA was announced in October 2023 and took effect in January 2024 payments.

You can find the current year's COLA on the Social Security Administration website (ssa.gov) or by calling Social Security at 1-800-772-1213. You can also log into your my Social Security account online, where you can see your current payment amount and view an estimate of what your payment will be after the COLA takes effect.

The announcement includes the percentage increase and the new average payment amount for SSDI beneficiaries. Your own new payment amount depends on what you were receiving before the increase—Social Security multiplies your current payment by the COLA percentage and rounds to the nearest dollar.

How COLA interacts with Medicare Part B premiums

If you receive both SSDI and Medicare Part B, the COLA increase can be partially or completely offset by a rise in your Part B premium. This happens because Medicare Part B premiums are deducted directly from your SSDI payment each month.

However, there is a hold-harmless provision that protects most SSDI beneficiaries. If your Part B premium increases by more than your COLA increase, Social Security will not let your total payment go down. Instead, your payment stays the same, and Medicare absorbs the difference. This protection does not explore if you are paying a higher Part B premium because of your income (called Income-Related Monthly Adjustment Amounts, or IRMAA), so high-income beneficiaries may see their net payment decrease.

In years with no COLA, your Part B premium still may increase, which means your net SSDI payment could go down unless the hold-harmless rule applies to you.

COLA and Supplemental Security Income (SSI) payments

SSI recipients also receive the same COLA percentage as SSDI beneficiaries, but the way it works is slightly different. SSI is a needs-based program with a federal benefit rate that increases each January by the COLA percentage. If you receive both SSDI and SSI (called "concurrent" benefits), both payments increase by the same percentage.

Some states add money to the federal SSI payment. These state supplements may or may not increase with the COLA—it depends on the state's rules. Contact your state's SSI program to find out whether your state supplement will increase.

What happens to your SSDI if you return to work

If you are using a work incentive such as the Plan to Achieve Self-Support (PASS) or the Impairment Related Work Expenses (IRWE) deduction, your COLA increase applies to your full SSDI payment amount, not just the portion you are currently receiving. This means your work incentive calculations may change in January.

For example, if you are using PASS and your SSDI payment increases by $50 per month due to COLA, the amount of work income you can earn before your SSDI payment is reduced also increases. Work incentive programs are complex, and a COLA increase can affect how much you can earn. Contact your local Social Security office or a work incentive planning and information (WIPA) project to understand how the increase affects your specific situation.

COLA history and why some years had no increase

Since 1975, there have been only three years with no COLA: 2010, 2011, and 2016. These years occurred when the Consumer Price Index showed no inflation or deflation (falling prices). In 2009, there was also no COLA because the CPI-W had declined from the previous year.

The largest COLA increases happened in 2022 (8.7 percent) and 2023 (8.7 percent), driven by high inflation following the pandemic. These were the largest increases in four decades. By contrast, many years in the 2010s saw increases of 0.3 percent to 2 percent.

The COLA formula has not changed since 1975. Social Security does not adjust it for regional differences in cost of living, changes in medical expenses, or individual circumstances. It is a single national percentage applied uniformly to all beneficiaries.

How to plan your budget around COLA increases

Because Social Security announces the COLA in October, you have time to plan before the January increase takes effect. If you receive SSI, the federal benefit rate increases in January, which may affect your housing information, food information, or other means-tested programs that count SSI as income.

If you are working and using a work incentive, review your earnings plan in January to make sure your work income is still within the limits. If you are paying for Medicare Part B, check whether your premium is increasing and whether the hold-harmless rule will protect your payment.

Some beneficiaries use the COLA increase to build savings, pay down debt, or increase spending on health care or other needs. Others see the increase offset by rising costs or premium increases. The COLA is meant to help maintain your purchasing power, but it does not always keep pace with the specific costs you face.

Frequently Asked Questions

Can I get a COLA increase if I just started receiving SSDI?

Yes. If you are receiving SSDI on January 1, you will receive the COLA increase that month, regardless of when you started benefits. The increase is applied to all beneficiaries in the same month.

What if I disagree with how Social Security calculated my new payment amount?

Contact Social Security to ask them to review the calculation. You can call 1-800-772-1213, visit your local office, or log into your my Social Security account to see the details. Social Security will explain how the COLA percentage was applied to your specific payment.

Does COLA increase affect my Medicaid or food information?

It may. Some states count SSDI income when determining Medicaid or SNAP (food information) may be able to access. A COLA increase could push your income above the limit and affect your benefits. Contact your state's Medicaid and SNAP programs to find out how a payment increase affects you.

If there is no COLA one year, does my payment stay exactly the same?

Yes, your SSDI payment amount stays the same. However, your Medicare Part B premium may still increase, which would reduce your net payment. The hold-harmless rule protects most beneficiaries in this situation.

How is COLA different from a raise I would get at a job?

COLA is a fixed percentage applied to all beneficiaries based on national inflation. A job raise is based on your performance, experience, or market conditions. COLA does not reward work or individual circumstances—it is meant only to preserve the purchasing power of your benefit amount.