Will There Be a 2010 Cost of Living Allowance (COLA) Increase for People With Disability Benefits?

by Editorial Board on August 9, 2010 · 0 comments

in Disability News,Living with a Disability

For the last thirty years, recipients of social security disability payments have, each year, received an increase in their benefits. This increase is known as the cost of living increase.  Each year inflation is assumed to increase the cost of food, shelter and other expenses, so too in turn does the benefits granted.

In 2010 there will be no COLA increase for those who receive disability benefits. The global financial crisis means that there has been no inflation, so the cost of day to day life has not increased. The COLA is based on a formula that is very similar to the consumer price index, although they are not exactly the same. No growth in the economy in recent times means that this formula has determined that disability payments will remain static. Forecasts predict that there will likely be no increase in 2011 either.

While some costs of living, such as gasoline prices and energy costs have dropped, people who receive a disability payment often spend a large amount of their income on medical costs. These costs have in turn increased. While the consumer price index has not increased, the reality is for many people living with a disability that the true cost of living actually has.  For that reason we think it’s a shame that the COLA will not increase for people on disability.

Many have criticized the decision to not increase benefits in 2010.  Fifty seven million people receive social security payments around the country, fifteen million of these are on disability benefits. This money goes back into the economy when spent, and so some economists have even called the decision detrimental to the US economy.

Are You Eligible for A $250 Payment?

By law, the COLA must be in line with the consumer price index. This means that if there is no inflation then payments cannot be increased. The laws surrounding this which were created in 1975 are quite rigid. In an attempt to increase the income of recipients of social security, the Obama administration is seeking to have a one time payment of $250 awarded, among others, to those who receive disability payments.

The last COLA increase was around 5.8%, while the one time payment is the equivalent increase of 2%. So while it’s less than half of what some may have been expecting, it is still a welcome payment for those who are struggling to meet the cost of living on disability payments. The $250 payments to all who get Social Security benefits will total around $13 billion.

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