07 Nov COLA Benefits Increasing for 2015
The Social Security Administration recently issued a press release indicating that, beginning in January 2015, individuals receiving Social Security and Supplemental Security Income (SSI) benefits will experience a 1.7% increase in the amount of their benefits. This increase in benefits is due to a Cost of Living Adjustment (COLA) and will benefit almost 60 million Social Security benefits recipients and 8 million SSI recipients.
Basic Information About COLA
A Cost of Living Adjustment is designed to combat the effects of inflation by ensuring that the amount of benefits recipients are receiving is keeping up with inflation. COLAs were first permitted in the 1972 Social Security Amendments, and automatic annual COLAs were implemented in 1975. Before this time, benefits were only increased by a special act of Congress.
The Social Security Administration uses a certain index to determine whether a COLA is warranted and, if so, in what amount. The precise index used is the Consumer Price Index for Urban Wage Earners and Clerical Workers (abbreviated as CPI-W). The CPI-W, in turn, is determined by the Bureau of Labor Statistics. In order to determine if there will be any COLA during a particular year, the Administration examines the percentage increase between the CPI-W for the third quarter of the last year a COLA was determined to the third quarter of the present year. If there is no percentage increase, then there will be no COLA.
The Importance of COLAs for Beneficiaries
As noted above, the purpose of a COLA is to protect beneficiaries against the effects of inflation. Inflation occurs when there is a sustained increase to the price for various goods. Many of us are aware of inflation (even if we do not know what to call it) when we notice groceries, gasoline, or other goods cost more than they did in previous years. For example, a gallon of milk that cost $3.00 last year but costs $3.03 now costs more because of inflation. Inflation is usually expressed as a percentage; 3% inflation, for example, means that a $2.00 loaf of bread will cost $2.06 in one year ($2.00 *1.03% = $2.06).
For Social Security benefits recipients, making sure that their benefits continue to enable them to meet their living expenses is immensely important. Suppose a beneficiary receives $1,000.00 per month in disability benefits. She has budgeted $200.00 for her monthly grocery expenses. If her groceries now cost $250.00 due to inflation, but there is no COLA, then she must find $50.00 from somewhere else in her budget.
Contact The Klok Law Firm
At The Klok Law Firm, LLC, we help injured individuals apply for and receive Social Security disability and Supplemental Security Income benefits. We represent claimants through all steps of the application and appeals processes. Contact us at (843) 216-8860 for a free consultation. We can explain the process of receiving benefits to you and advise you of the benefits to which you may be entitled, including any cost of living adjustments.