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Second lowest SSDI COLA since 1975

On Behalf of | Oct 16, 2013 | Social Security Disability

Programs like Social Security disability insurance (SSDI) and supplemental security income (SSI) help many people in the Columbus, Ohio area. One particularly valuable element of the Social Security Administration’s benefit programs is the addition Congress made in 1975, that added an automatic Cost-of-Living Adjustment (COLA). The COLA is based on the inflation rate as measured by the Consumer Price Index (CPI).

Without the COLA, SSA’s benefit programs, SSDI, SSI and the old age and survivors insurance (OASI), would have shrunk relative to inflation. In the 1970s, when inflation began to rapidly increase, Congress enacted the automatic COLA to prevent many of the disabled and elderly from having their benefits eroded away.

For instance, if inflation averaged 2 percent every year for ten years, without an adjustment, at the end of that decade, a beneficiary would have experienced a cut in their spending power of 20 percent.

This can be devastating for those on limited incomes, especially when many of the costs they have to pay, such as those related to their disability, are often increasing ahead of inflation.

Without the COLA, many disabled would have an even more difficult time covering their expenses. This year, the COLA is projected to be approximately 1.5 percent. While this is better than nothing, it is less than ideal.

Many of the elderly and disabled spend a greater percentage of their income on medical costs and healthcare expenses, which tend to rise faster than the Consumer Price Index that is used for the COLA.

It has been argued that the SSA should use a specialized CPI that better accounts for how many of the program’s beneficiaries spend their money, but that would likely lead to Social Security becoming even more expensive to fund and given the political climate in Washington, D.C., seems unlikely.

Source: USA Today, “Social Security raise to be lowest in years,” Stephen Ohlemacher, AP, October 13, 2013