The 2020 COLA raised SSDI payments by 1.6 percent

In October 2019, the Social Security Administration announced that the 2020 cost of living adjustment (COLA) would be 1.6 percent. This meant that starting with the December 2019 payment (received in January 2020), every person receiving SSDI got a 1.6 percent raise to their monthly benefit amount. The increase was smaller than the previous year's 2.8 percent COLA, reflecting lower inflation in 2019.

The actual dollar amount of your raise depended on what you were receiving before the adjustment. Someone getting $1,000 per month would have received an additional $16 per month. Someone getting $1,500 would have received $24 more. The increase was automatic — you did not need to report anything or take any action to receive it.

This was the first COLA applied under the Trump administration's second year in office. The adjustment was calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the same index used every year since 1975 to measure whether prices had risen enough to warrant a benefit increase.

Key Takeaways

  • The 2020 COLA of 1.6 percent took effect with the December 2019 payment, which arrived in January 2020 bank accounts.
  • The increase was automatic and applied to all SSDI beneficiaries, including those who also received Supplemental Security Income (SSI).
  • The 1.6 percent figure was lower than the 2019 COLA of 2.8 percent because inflation was lower in 2019.
  • Your new benefit amount became the basis for calculating Medicare premiums, Medicaid spend-down amounts, and work incentive thresholds for the rest of 2020.

How the 2020 COLA was calculated

The Social Security Administration uses a specific formula to determine whether a COLA happens at all. It compares the average Consumer Price Index for the third quarter of the current year (July, August, September) to the average CPI for the third quarter of the previous year. If prices went up, beneficiaries get a raise equal to that percentage increase. If prices stayed flat or fell, there is no COLA — this happened in 2009, 2010, and 2016.

For 2020, the CPI-W in the third quarter of 2019 was 1.6 percent higher than it had been in the third quarter of 2018. That 1.6 percent became the official COLA. The announcement came in mid-October 2019, giving the Social Security Administration time to reprogram its payment systems and notify beneficiaries before the first adjusted payment went out.

The CPI-W measures price changes for food, housing, transportation, medical care, and other goods and services that wage earners and clerical workers typically buy. It does not measure what disabled people or retirees actually spend money on — for instance, it underweights medical costs, which tend to be higher for people on SSDI. Advocates have long argued for a different index, but Congress has not changed the law.

What the 2020 COLA meant for your other benefits

If you were receiving both SSDI and Supplemental Security Income (SSI), your SSI payment also went up by 1.6 percent in January 2020. However, the two programs have different rules about how much you can earn and still receive benefits, so the COLA affected your work incentive thresholds differently depending on which program you were on.

Your new SSDI benefit amount also became the basis for calculating your Medicare Part B and Part D premiums for 2020. Most people on SSDI are automatically enrolled in Medicare after 24 months of receiving benefits. If your SSDI payment went up, your premium might have gone up as well — though the relationship is complex because Medicare premiums are also adjusted each year and are subject to a "hold harmless" rule that protects most beneficiaries from premium increases larger than their COLA.

If you were receiving Medicaid and your state used your SSDI benefit as the basis for determining your Medicaid spend-down amount (the amount you must pay toward medical costs before Medicaid covers the rest), the 1.6 percent increase affected that calculation. Some states use the federal benefit rate; others use your actual SSDI amount. You would have needed to contact your state Medicaid office to know which rule applied to you.

The 2020 COLA and work incentives

If you were using SSDI work incentives like the Student Earned Income Exclusion or the Plan to Achieve Self-Support (PASS), the 2020 COLA affected the income thresholds that determine how much you can earn before your benefits are reduced. The Substantial Gainful Activity (SGA) threshold — the amount of monthly earnings that triggers a medical review of your case — was $1,260 per month for non-blind workers in 2020, unchanged from 2019. The Trial Work Period (TWP) still paid your full benefit for any month in which you earned any amount, regardless of how much.

The Impairment Related Work Expenses (IRWE) deduction, which lets you exclude certain disability-related costs from your countable earnings, was not directly tied to the COLA. However, if you were using a PASS to set aside income for a work goal, the COLA affected how much of your benefit counted toward the PASS monthly budget. The details depended on how your PASS was written and what your state's rules were.

Why 2020's COLA was smaller than 2019's

The 2019 COLA had been 2.8 percent, nearly double the 2020 figure. This drop reflected real economic conditions: inflation slowed in 2019 compared to 2018. Oil prices fell, wage growth remained modest, and the Federal Reserve held interest rates steady. The CPI-W straightforward measured what actually happened in the economy.

COLA amounts vary year to year based on inflation, and there is no way to predict what next year's adjustment will be. In some years — 2009, 2010, 2016 — there was no COLA at all because prices did not rise. In other years, like 2008 and 2011, the COLA exceeded 5 percent. The 2020 COLA of 1.6 percent was modest but not unusual by historical standards.

How to verify your 2020 benefit amount

Your December 2019 Social Security statement (the one you received in January 2020) showed your new benefit amount after the 1.6 percent increase. If you had set up a my Social Security account at ssa.gov, you could log in and see your payment history, which would show the exact date the increase took effect and the new monthly amount.

If you received a paper statement in the mail, it listed your current monthly benefit. If you did not receive a statement or could not find yours, you could call the Social Security Administration at 1-800-772-1213 (TTY 1-800-325-0778) and ask a representative to read your current benefit amount to you. You would need to provide your Social Security number and answer security questions to verify your identity.

If your benefit amount did not increase by 1.6 percent, or if you received no statement at all, contact Social Security directly. Errors in COLA process were rare but did happen, and the agency could correct them retroactively.

Frequently Asked Questions

Did the 2020 COLA explore to my family members receiving benefits on my record?

Yes. If you were receiving SSDI and your spouse, ex-spouse, or children were also receiving benefits based on your work record, they all received the 1.6 percent increase in January 2020. Family members' benefits are calculated as a percentage of your primary insurance amount, so when your benefit went up, theirs went up proportionally.

What if I was in a Trial Work Period when the 2020 COLA took effect?

The COLA did not change how the Trial Work Period works. You still received your full benefit for any month you worked, regardless of earnings. The 1.6 percent increase straightforward meant your full benefit was 1.6 percent higher during the TWP months.

Did the 2020 COLA affect my Supplemental Security Income (SSI) federal benefit rate?

Yes. The federal SSI benefit rate for an individual in 2020 was $783 per month, up from $771 in 2019 — a 1.6 percent increase. If your state added a state supplement to the federal SSI amount, that supplement was adjusted separately according to state rules, which vary.

How does the COLA get announced, and when do I find out about next year's increase?

The Social Security Administration announces the COLA in mid-October each year. The 2020 COLA was announced on October 17, 2019. The announcement includes the percentage increase and the effective date (always January, with the payment arriving in the following month). You can find the announcement on ssa.gov or by calling Social Security.

Can I request a larger COLA if 1.6 percent did not keep up with my actual expenses?

No. The COLA is set by law and applies uniformly to all beneficiaries. You cannot request a larger increase, and your individual expenses do not factor into the calculation. If your costs rose faster than 1.6 percent, you might be able to reduce expenses, increase income through work incentives, or explore other information programs, but the COLA amount itself is not negotiable.