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Disabled individuals may qualify for financial benefits from the Social Security Administration’s disability benefits programs – Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Both programs provide qualifying individuals with monthly payments. Each year, the Social Security Administration uses economic data to determine whether to increase benefit payments under a cost-of-living adjustment.
What Is a COLA and How Is It Calculated?
A cost-of-living adjustment, or COLA, refers to a percentage increase in benefits that the Social Security Administration makes to SSDI and SSI payments most years. A COLA protects the purchasing power of Social Security disability benefits from the rise in living expenses due to inflation.
The Social Security Administration calculates a COLA annually following the third quarter of the calendar year and applies it to benefits in the following year. The SSA bases its COLA on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) determined by the U.S. Bureau of Labor Statistics, comparing the CPI-W for the third quarter in the present year to the CPI-W in the third quarter of the previous year that had a COLA. The SSA rounds any increase to the nearest tenth of one percent. In years that have no increase in the CPI-W, the SSA does not impose a COLA for the following year.
What Is the 2026 COLA?
The Social Security Administration announced a COLA of 2.8 percent for 2026. As a result, all benefit payments issued by the SSA will see a 2.8 percent increase beginning with the January 2026 payment. SSDI and SSI recipients should see their monthly benefit payments increase automatically in 2026.
How the COLA Affects SSDI Payments
The SSA’s annual COLA increases monthly SSDI payments, with payments going up by 2.8 percent in 2026. SSDI recipients include disabled workers and other individuals with disabilities who qualify for SSDI under a spouse’s or family member’s work record.
Annual COLAs do not directly affect an individual’s eligibility for SSDI. However, the Social Security Administration can also increase the substantial gainful activity threshold from one year to the next, as it has for 2026. SSDI applicants who receive income from work that exceeds the substantial gainful activity threshold might not qualify as disabled under Social Security regulations, and thus cannot qualify for SSDI benefits.
The increase in SSDI benefits due to the 2026 COLA may affect a recipient’s other benefits, such as workers’ compensation and state disability benefits, because those programs’ rules may offset them based on a person’s receipt of Social Security disability benefits.
How the COLA Affects SSI Payments
SSI pays recipients a monthly benefit equal to the federal benefit rate minus any qualifying income they earn or in-kind support they receive. The 2026 COLA of 2.8 percent also applies to the base federal benefit rate for SSI payments, meaning that recipients will also see an increase in their monthly payments in 2026.
Does the COLA Affect Medicare or Medicaid Costs?
SSDI recipients who receive benefits for 24 months become eligible to enroll in Medicare, and some recipients choose to enroll in Medicare Part B. Because premium payments for Part B come directly from Social Security benefits, increases in Part B premiums can offset the increase in benefits from the annual COLA. However, the “hold harmless” rule ensures that Part B premium increases cannot exceed the COLA.
Increases in SSI payments from annual COLAs can also affect recipients’ Medicaid eligibility, as increases may push them over the Medicaid resource limits.
Contact Our Firm Today
The Social Security Administration applies a COLA every year to ensure that disability benefits keep pace with rising living costs. Contact Disability Advocates Group today for a free initial consultation with an SSD attorney to learn more about how annual cost-of-living adjustments can affect your SSDI or SSI payments.
