The 2017 COLA raised SSDI payments by 2 percent

In October 2016, the Social Security Administration announced a 2 percent cost of living adjustment (COLA) for all SSDI beneficiaries, effective January 2017. This was the first meaningful increase since 2009. For the average SSDI recipient receiving around $1,170 per month, the 2 percent increase added roughly $23 to their monthly check.

The 2017 COLA was calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), measured from the third quarter of 2015 to the third quarter of 2016. When inflation in that period exceeded zero, Social Security was required to pass the increase to beneficiaries. The announcement came in the fourth quarter of 2016, giving beneficiaries notice before the new payment amount took effect on their January 2017 checks.

This increase applied to all SSDI recipients regardless of age, work history, or the type of disability. It also applied to family members receiving benefits on a disabled worker's record—spouses, children, and ex-spouses all received the same percentage increase on their individual benefit amounts.

Key Takeaways

  • The 2017 COLA was 2 percent, the first increase since 2009 after years of zero adjustments during low-inflation periods.
  • The increase was calculated using inflation data from the third quarter of 2015 through the third quarter of 2016.
  • All SSDI beneficiaries and their family members received the same 2 percent increase on their individual monthly payments.
  • The new payment amounts took effect in January 2017, with the announcement made in October 2016.

Why there were no COLA increases from 2010 to 2016

Between 2010 and 2016, SSDI beneficiaries received no cost of living adjustments for seven consecutive years. This was not a policy choice but a direct result of how the COLA is calculated. The adjustment is tied to the Consumer Price Index, and when inflation is flat or negative, no increase is triggered.

The years following the 2008 financial crisis saw historically low inflation. Energy prices dropped sharply, and consumer prices remained stagnant. Under the law, Social Security cannot round up or create an increase when the CPI shows no growth. This meant beneficiaries' monthly payments stayed frozen even as their actual living costs—rent, food, utilities—continued to rise in many parts of the country.

The 2017 COLA of 2 percent was therefore significant to beneficiaries who had waited nearly a decade for any increase. However, many advocates noted that even a 2 percent bump did not fully compensate for the cumulative inflation that had occurred since 2009.

How the 2017 increase affected Medicare premiums

For SSDI beneficiaries who were also enrolled in Medicare Part B, the 2017 COLA had a complicated effect. Under a rule called the Government Pension Offset (GPO) hold-harmless provision, beneficiaries whose Medicare Part B premiums would otherwise consume more than their COLA increase are protected from a net loss.

In 2017, the standard Medicare Part B premium was $134 per month. For most beneficiaries, the 2 percent COLA increase was larger than any premium increase, so they saw a genuine gain in their take-home payment. However, for beneficiaries with very low SSDI amounts or those subject to other deductions, the interaction between the COLA, the premium, and other withholdings could be complex.

Beneficiaries who received both SSDI and Supplemental Security Income (SSI) faced a different situation. SSI is not tied to the COLA; instead, the federal SSI payment standard is adjusted separately. Some states also supplement SSI, and those state supplements may or may not have increased in 2017.

The 2017 COLA and work incentives

The 2 percent increase in 2017 did not change any of the work incentive rules that allow SSDI beneficiaries to test their ability to work. The Ticket to Work program, the Student Earned Income Exclusion, and the Plan to Achieve Self-Support (PASS) all remained available under the same terms.

However, some work incentive thresholds are tied to the federal poverty level or to national wage averages, which do shift with inflation. The Substantial Gainful Activity (SGA) threshold—the earnings limit above which work is considered substantial—was $1,170 per month in 2017. This amount is adjusted annually and does respond to wage growth, though not directly to the COLA.

Beneficiaries who were working or considering work in 2017 should have reviewed their current earnings against the SGA threshold and consulted with a work incentives planning specialist if they were unsure whether their work would affect their benefits.

State supplemental payments and the 2017 increase

Some states provide supplemental payments to SSDI beneficiaries in addition to the federal SSDI amount. These state supplements are not automatically adjusted by the federal COLA. Instead, each state decides whether and when to increase its supplement.

In 2017, most states that offered supplements did increase them, but the timing and amount varied. Some states tied their increases to the federal COLA, while others used their own inflation measures or legislative decisions. Beneficiaries receiving state supplements needed to check with their state's disability agency to learn whether their supplement increased and by how much.

This variation meant that two SSDI beneficiaries with identical federal payments could have received very different total monthly amounts depending on where they lived.

How beneficiaries learned about the 2017 COLA

The Social Security Administration announced the 2017 COLA in October 2016, giving beneficiaries three months' notice before the new payment took effect. The announcement was made through a press release, the Social Security website, and notices mailed to beneficiaries.

Beneficiaries could also view their updated payment amount in their Social Security account online through my Social Security, which allows account holders to see their current benefit amount and projected future benefits. The new payment amount appeared in January 2017 statements and on the first check of the year.

Some beneficiaries did not receive formal notice and only discovered the increase when their check arrived. Others missed the announcement entirely. If a beneficiary believed their payment was incorrect, they could contact Social Security directly to request a detailed explanation of how their benefit was calculated.

Frequently Asked Questions

Did the 2017 COLA explore to people who started SSDI after 2016?

No. The COLA is applied to the primary insurance amount (PIA) that is calculated when a person is first found disabled. People who were approved for SSDI in 2017 or later received their initial benefit amount based on their own earnings record and the rules in effect at the time of approval. They then received future COLAs starting in the year after their approval.

If I was on SSDI in 2017 but had a work trial, did the 2 percent increase affect my trial period?

The COLA increase did not change the rules for work trials or the nine-month trial work period. Your increased benefit amount was still subject to the same work incentive rules. If your earnings during the trial exceeded the SGA threshold, your benefits could still be suspended, regardless of the COLA increase.

Did the 2017 COLA affect how much I could earn before losing benefits?

The COLA itself did not change the SGA threshold, which is adjusted separately based on national wage data. However, the SGA threshold for 2017 was $1,170 per month, and you should have checked this amount against your own earnings to determine whether your work affected your benefits.

What if I was receiving both SSDI and SSI in 2017?

Your SSDI portion increased by 2 percent, but your SSI portion did not automatically increase by the same amount. SSI has its own federal payment standard, which is adjusted annually but not necessarily by the same percentage as the COLA. Your total benefit depended on how both programs' adjustments interacted with your other income and resources.

Can I find out what my 2017 COLA increase was in dollars?

Yes. You can view your payment history and year-to-year changes through your my Social Security account online, or you can call Social Security at 1-800-772-1213 to request a detailed breakdown of your 2017 benefit amount and how it was calculated.