2024 Cost-of-Living Adjustment
For the over 70 million Americans who receive monthly Social Security and Supplemental Security Income (SSI) benefits, 2023 has brought notable change.
The annual Cost-of-Living Adjustment (COLA) is a yearly calculation to ensure inflation is taken into account when determining monthly Social Security benefits. The 2024 COLA increase is 3.2 percent.
So how will this year’s COLA affect you? And what other Social Security changes should you be aware of?
How Does the 2024 COLA Compare to Recent Years?
As stated above, the Cost-of-Living Adjustment for 2024 is 3.2 percent. This adjustment presents a dramatically lower increase in the Cost-of-Living Adjustment (COLA) compared to the past two years. In 2022 the COLA was 5.9 percent, and in 2023 the 8.7 percent increase was the highest adjustment 40 years. Prior to 2022, the COLA had not exceeded 3 percent since 2011. These abnormally high adjustments are a result of inflation that followed the COVID-19 pandemic skyrocketing consumer prices. The 3.2 percent COLA for 2024 could be a sign of a return to economic normalcy, following the trend of lower COLA increases throughout the 2010’s.
Who Is Affected?
Nearly 1 in 5 Americans rely on monthly Social Security Benefits and Supplemental Security Income Benefits; with some individuals receiving both. For many Americans who are otherwise unable to work full-time due to qualifiers like age and disability, these payments constitute the bulk of their incomes. So, the 3.2 percent increase is both welcome and crucial for those concerned that the adjustment will not do enough to offset the rising costs of housing, utilities, food, and healthcare.
How the SSA Calculates Benefits Adjustments
Social Security’s benefits are calculated annually using a specific set of consumer price index data, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As a result of the Social Security Act, the annual COLA is contingent upon the Consumer Price Index, and the rise in the CPI-W reflects the 3.2 percent COLA increase.
Although the COLA has been calculated using the CPI-W since 1975, some people, including President Biden, argue that the yearly COLA should be calculated using different data. There are actually a handful of congressional bills right now dealing with this very topic. The people behind them believe the Consumer Price Index for the Elderly (CPI-E) is better suited to measuring the current cost of living for the senior citizen demographic, as retired workers make up nearly 75 percent of Social Security beneficiaries.
Other Notable Changes to Social Security in 2024
- Quarter of Coverage Increase will increase from $1,640 to $1,730. “You earn a quarter of coverage (QC)—also called a ‘credit’—for a certain amount of work covered under Social Security, but you may earn no more than four QCs per year. Generally, you need to be fully insured to receive Social Security benefits, but there may be other requirements.” See https://www.ssa.gov/oact/progdata/insured.html for more information on insured status requirements. Note: QCs also affect eligibility for Disability Insurance Benefits.
- The amount that Social Security considers to be “Substantial Gainful Activity” (SGA), which roughly means working, will increase from $1,470 per month to $1,550 per month (or $2,590 per month if you are blind). The threshold amount for a Trial Work Period (TWP) will also increase from $1,050 to $1,110 per month.
- The SSI Federal Payment Standard will increase to $943 per month for individuals and $1,415 per month for couples.
When Did These Changes Take Effect?
Americans receiving Social Security benefits will see this increase in their monthly payments beginning January 2024. Those receiving SSI benefits will see the change at the end December 2023.
It’s also important to note that the rate for Medicare Part B premiums for 2024 increased by $9.80 from the 2023 rate, up to $174.70 per month. This will change individuals’ monthly benefit amounts, as payments toward those premiums are often deducted directly from Social Security checks.
At The Feingold Law Office, we help individuals in Social Security Disability claims and in personal injury matters. For specific questions or concerns regarding filing for Social Security benefits or appealing a denial, please reach out today for more information. We are here to help!
Richard I. Feingold
Richard I. Feingold & Associates, P.C.
Personal Injury & Social Security Disability