The 2020 COLA was 1.7 percent, raising most SSDI payments by about $20 per month

In October 2019, the Social Security Administration announced that the 2020 Cost of Living Adjustment (COLA) would be 1.7 percent. This was the smallest increase since 2016. For someone receiving $1,200 per month in SSDI benefits, the 2020 COLA meant an increase of roughly $20 per month, bringing the payment to approximately $1,220 starting in January 2020.

The 1.7 percent figure applied to all Social Security beneficiaries — retirees, disabled workers, and survivors. SSDI recipients did not receive a separate calculation; the same percentage increase applied across the entire program. The adjustment took effect with the January 2020 payment, which most people received in early February 2020.

The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation in the cost of goods and services. Because inflation was relatively low in 2019, the resulting COLA was modest. The formula compares the average CPI-W for July, August, and September of the year before the adjustment takes effect to the same three months from the previous year.

Key Takeaways

  • The 2020 COLA of 1.7 percent was the smallest increase since 2016 and reflected low inflation in 2019.
  • A person receiving $1,200 monthly in SSDI would have seen their payment increase by approximately $20 per month starting in January 2020.
  • The COLA applies to all SSDI beneficiaries automatically; you do not need to request it or take any action.
  • The adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, which measures inflation in everyday costs.

How the 2020 COLA compared to other years

The 1.7 percent increase in 2020 was smaller than the adjustments in 2017, 2018, and 2019. In 2019, beneficiaries received a 2.8 percent COLA. In 2018, the increase was 2.0 percent. In 2017, it was 0.3 percent — the smallest COLA since automatic adjustments began in 1975. The year 2016 saw no COLA at all, as inflation was negative.

The variation year to year reflects real changes in the cost of living. When inflation is higher, the COLA is higher. When inflation is lower or negative, the COLA is lower or zero. The 2020 figure of 1.7 percent fell in the middle range of recent history, neither particularly generous nor unusually small.

Why the 2020 COLA was lower than some expected

Many disability advocates and beneficiaries had hoped for a larger increase in 2020. Inflation in healthcare and housing — two major expenses for disabled people — had risen faster than the overall CPI-W average. However, the COLA formula does not weight healthcare or housing more heavily; it treats all consumer goods and services equally.

Additionally, energy prices fell in 2019, which pulled down the overall inflation rate. Gasoline prices in particular declined, and because gasoline is a large component of the CPI-W, the drop affected the final COLA calculation. This is one reason why COLA amounts can feel disconnected from the actual costs disabled people face.

How the COLA affected your SSDI payment in 2020

If you were receiving SSDI in January 2020, your payment increased automatically. You did not need to contact Social Security or submit any paperwork. The increase appeared in your January payment, which arrived in early February (or on the third of the month if you received payments by direct deposit on the third, or on the second Wednesday of the month if you received them on a Wednesday).

The exact dollar amount of your increase depended on your benefit amount. Someone receiving $500 per month would have seen an increase of about $8.50. Someone receiving $2,000 per month would have seen an increase of about $34. The percentage was the same for everyone, but the dollar amount varied based on what you were already receiving.

COLA and your Medicare premiums in 2020

For many SSDI recipients who also receive Medicare, the 2020 COLA had a complicated effect. If your SSDI payment was high enough that you paid the standard Medicare Part B premium, the COLA increase went into your pocket. However, if you were subject to the hold-harmless provision, your Medicare Part B premium could not increase more than your COLA increase.

The hold-harmless rule protects beneficiaries from having their entire COLA consumed by a Medicare premium increase. In 2020, Medicare Part B premiums actually decreased slightly, so hold-harmless did not come into play. But in years when premiums rise, this rule can mean that a small COLA leaves little or nothing for you to keep after your premium goes up.

COLA and your work incentives in 2020

If you were working while receiving SSDI in 2020, the COLA affected your Substantial Gainful Activity (SGA) threshold — the earnings limit above which Social Security considers you able to work and may stop your benefits. In 2020, the SGA threshold was $1,260 per month for non-blind workers and $3,367 for blind workers. These thresholds increase each year based partly on wage inflation, which is calculated separately from the COLA.

The COLA itself does not directly change your SGA threshold, but it is part of the broader economic picture that Social Security uses to adjust work incentive rules. If you were using a work incentive like the Plan to Achieve Self-Support (PASS) or Impairment Related Work Expenses (IRWE), the 2020 COLA did not change how those programs worked, though your benefit amount increased.

What happened to beneficiaries who received SSI instead of SSDI

Supplemental Security Income (SSI) beneficiaries also received the 1.7 percent COLA in 2020, though SSI works differently from SSDI. SSI is a needs-based program, so the COLA increase could have affected your resource limits or income thresholds. In 2020, the federal SSI benefit rate for an individual was $783 per month, and for a couple, $1,175 per month — both increased by the 1.7 percent COLA.

However, SSI recipients in some states also received a state supplement, and not all state supplements increased by the same percentage. If you received both federal SSI and a state supplement, you would have needed to check with your state's SSI program to see how the COLA affected your total payment.

Frequently Asked Questions

Did I have to do anything to receive the 2020 COLA increase?

No. The COLA is automatic. If you were receiving SSDI in January 2020, the increase was applied to your account without any action on your part. You did not need to contact Social Security, submit a form, or verify your information.

Why was the 2020 COLA so small compared to what I expected?

The COLA is based on inflation measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. In 2019, overall inflation was low, partly because energy prices fell. The COLA does not account for the fact that healthcare and housing costs may have risen faster than the average.

If I was working and earning close to the SGA limit, did the 2020 COLA change how much I could earn?

The COLA itself did not change the SGA threshold. The SGA threshold is adjusted each year based on wage inflation, which is calculated separately. In 2020, the SGA threshold for non-blind workers was $1,260 per month. You would need to check the current year's threshold to see if it changed from 2019.

How does the COLA affect my Medicaid coverage?

In most states, the COLA increase to your SSDI payment does not affect your Medicaid coverage, because Medicaid for SSDI recipients is usually based on your disability status, not your income level. However, in a few states that use income-based Medicaid rules, a COLA increase could theoretically affect your coverage. Contact your state Medicaid office if you are unsure.

What if I was not receiving SSDI in January 2020 but started later that year?

Your benefit amount would be calculated using the 2020 payment rates, which already included the 1.7 percent COLA. You would not receive a separate adjustment. Your benefit would be based on your work history and the 2020 rules in effect when your claim was processed.