Social Security disability recipients will see a modest increase in monthly benefits in 2020, although the increases are on an even smaller scale than in recent years.
Each year, the Social Security Administration calculates an annual cost-of-living adjustment (COLA), to compensate for changes in inflation.
Announced in October 2019, this year's COLA amounts to 1.6 percent, which translates to a rise in monthly benefits from $771 to $783 for more than eight million Supplemental Security Income recipients. For another eight million Social Security Disability Insurance (SSDI) recipients, the average monthly benefit goes from $1,238 to $1,258.
These increases, however, are the smallest in three years. The SSA granted a 2.8 percent COLA in 2018 and a 2 percent COLA in 2017.
“People are going to be dipping into savings… and when they don’t have the savings, they might have to borrow the money,” Mary Johnson, a policy consultant for the Senior Citizens League, told USA Today. “The Social Security recipients tell us their standard of living has declined.”
The COLA is calculated based on the rate of inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This measure of inflation has long been criticized as unrepresentative of the spending patterns of Social Security disability recipients, who tend to spend a significantly higher percentage of their incomes on medical expenses than the rest of the population. Some advocates have pushed for the SSA to adopt a different measure of inflation, known as the CPI for the Elderly, as a solution.
Nonetheless, the Bureau of Labor Statistics has proposed that the SSA rely on an even narrower form of inflation measurement, known as the Chained CPI., sparking significant opposition.
In addition to annual benefit levels, the COLA also affects several other key thresholds. For example, one requirement for initial and ongoing eligibility for SSI and SSDI is that the person must no longer be able to participate in substantial gainful activity (SGA). Among other factors, this means that a person must not be able to earn more than a certain amount of monthly income. For 2020, the SGA level will increase from $1,220 to $1,260 per month.
Another example is that students receiving SSI can have a certain amount of their income excluded for the purposes of maintaining eligibility for the program. For 2020, this threshold increases from $1,870 to $1,900 monthly, or $7,550 to $7,670 annually.
Click here for a fact sheet about the SSA’s COLA increases.