Cost of Living Adjustment (COLA) Changes for 2016

January 28, 2016 by

If you receive Social Security benefits of any kind, you are probably familiar with the acronym, COLA. It stands for Cost of Living Adjustment, and its purpose is to ensure your benefits keep pace with inflation.

Unfortunately, for the year 2016,  there will be no COLA.  This is because there was no increase in the Consumer Price Index (CPI-W) from the third quarter of 2014 to the third quarter of 2015.  This is only the third time in the history of the COLA that this has happened!  The last two times were consecutively in years 2010 and 2011.

No Comfort

This is no comfort to those who depend upon their monthly benefits from the U.S. Treasury, which includes Disability Insurance and/or Supplemental Security Income (SSI) disability benefits.   As I wrote in an article in Spondylitis Plus magazine for the Spondylitis Association of America in 2014, the lack of a COLA can affect those with disabilities particularly hard because the wage index used to calculate the COLA may not accurately reflect increases in expenses for those receiving disability benefits.

Because there was no COLA in 2016, the SSI Federal Payment Standard stays the same at $733/month, although some states do pay a supplement.  The SSI Resources Limits remains the same at $2,000 for an individual and $3,000 for a couple; these numbers have not changed in a long time and are not affected by a COLA anyway.

Facts and Figures

You may be interested to learn that the estimated average monthly Social Security benefits payable in January 2016 for a disabled worker, spouse and one or more children is $1,983 per month.  Although there was no COLA, the 2016 amount is higher by six dollars than the 2015 estimate of $1976/month.  And the estimated monthly Social Security benefit for all disabled workers went up by one dollar to $1,166/month.

Some other important categories have changed even without a COLA.  For example, the amount of earnings necessary to earn one "Quarter of Coverage" (also sometimes called a "credit" or "Social Security credit") increased from $1,220 to $1,260.  This is the basic unit used to determine whether a worker is insured under Social Security.  No matter how much you earn in a year, you can only earn four Quarters of Coverage.

The "Substantial Gainful Activity (SGA)" amount for non-blind individuals also increased from $1090/month in 2015 to $1,130/month in 2016.  SSA uses the SGA amount to determine whether or not one is eligible for disability benefits.

As I mentioned in an earlier post, there has been some national debate about whether or not the CPI-W is the appropriate reference to determine the COLA. If you have an opinion on the matter, do some research and reach out to Social Security to ensure your voice is heard. Speaking out is the best way we can strengthen and improve these vital social programs.

Do you have more Social Security questions or concerns about a Social Security claim? I invite you to contact my office immediately so we can give you the help you need. Don’t miss out on needed benefits because you are not sure whether or not you qualify.