Social Security disability insurance, like Social Security itself, contains an annual cost-of-living adjustment. This year, however, the increase for inflation will be the smallest it has been since annual adjustments began in the mid 1070s.
The increase will be 1.7 percent, the Social Security Administration announced last week. The increase will take effect in January of next year.
The cost-of-living adjustment, often abbreviated COLA, is determined by using a formula based on the Consumer Price Index (CPI). Though the CPI was designed to measure inflation, the economy has experienced relatively little inflation recently.
The only exception to this has been energy costs. Overall, over the last twelve months, prices have gone up only 2 percent. Still, even in a low-inflation economy with mostly stable prices, 1.7 percent is not much of an increase.
The number of people who are affected is quite large. It does not only include retirees drawing Social Security and injured workers receiving SSD benefits. Those who get Supplemental Security Income (SSI) are also affected.
That brings the total number of people affected by the cost-of-living increase to about 66 million – 1 of every 5 Americans.
Of course, there is also some concern about the solvency of Social Security system in the long term. These issues have been raised repeatedly during the campaign for the upcoming election.
For many families, though, the most immediate concern is making ends meet right now. For injured workers, Social Security disability insurance plays a very important role in making that happen.
Source: “Social Security benefits to rise 1.7% in 2013,” USA Today, 10-16-12
Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our Social Security disability page.