The Social Security Administration (SSA) recently announced a 1.3 percent Cost-of-Living Adjustment (COLA) for all Social Security and Supplemental Security Income (SSI) beneficiaries. This means that the approximately 70 million Americans who receive Social Security benefits (such as disability, retirement, and survivors) will see an increase in their December 2020 benefit, which is payable in January 2021. Those individuals who receive SSI will see their increase beginning on December 31, 2020.
The timing of the announcement that 2021 benefits will be increasing 1.3 percent is particularly significant in light of the ongoing COVID-19 pandemic, as more people are in need of healthcare services than ever before. The impact of COVID-19 extends far beyond physical illness, as many Americans are now feeling the impact of social isolation, increased economic strain, and additional health conditions or challenges that could make COVID-19 even more dangerous if contracted. All these factors are likely to increase demand, and therefore patient costs, for mental health services that can help those struggling with anxiety, depression, and other mood disorders/behavioral health challenges.
Anyone currently receiving Social Security benefits or SSI payments will receive a communication from SSA in December with their new monthly benefit amount. This communication will arrive via postal mail or a my Social Security account (which is free and simple to set up), and it will also include any increases in taxes, Medicare, or other withholdings.
The COLA also applies to anyone receiving benefits as a dependent on a Social Security beneficiary’s record, such as children, spouses, or parents. So long as these individuals are officially listed as dependents on record, they will also receive a 1.3 percent increase to their benefits.
With the announcement of the COLA, Social Security also announced that the maximum amount of earnings subject to Social Security payroll tax in 2021 is also going to increase in 2021, as well as the retirement earnings test exempt amount. Click here for the Social Security Fact Sheet on 2021 changes. We also expect the Centers for Medicare and Medicaid Services to announce any changes or increases to 2021 Medicare premiums and deductibles in the coming weeks. We plan to share this information with you as well once it becomes available.
COLA determinations are made when inflation, and thus the costs of key goods and services, increases. This means COLA amounts can vary significantly each year due to a variety of economic factors, and there are years where no increase is issued. Click here to visit SSA’s website and see how the 2021 increase of 1.3 percent compares to historical COLA increases implemented since 1975.
If you have questions about this topic, please feel free to reach out to Brown & Brown Absence Services Group or your local Social Security office.
Nothing in this post is intended as advice or a suggestion to elect or not elect to claim benefits of any kind, including Social Security benefits, nor is it intended as financial advice in any way. The decision to claim benefits is a personal one that is contingent upon each individual’s unique circumstances.