Social Security Disability Benefits to Rise by Only 1.3 Percent in 2021

Social Security disability recipients will see an increase in benefit levels for 2021, although the rise will be the smallest in years due to the economic downturn caused by the COVID-19 pandemic.  

On October 13, the Social Security Administration (SSA) announced that Social Security benefit levels will increase by just 1.3 percent in 2021, compared with 1.6 percent in 2020 and 2.8 percent in 2019.

“They’ve never been this low for this long a period in the history of Social Security,” Mary Johnson, Social Security policy analyst for The Senior Citizens Leaguetold CNBC.

For recipients of Supplemental Security Income (SSI), Social Security’s primary disability benefits program for low-income people, monthly benefits will edge up from $783 to $794 for individuals, or from $1,175 to $1,191 for couples. (Some states provide an additional supplement for SSI recipients. Specific state-level supplements can be viewed here.)

For recipients of Social Security Disability Insurance (SSDI), Social Security’s primary disability benefits program for people with longer work histories, average monthly benefits will increase from  $1,261 to $1,277.

Each year, the SSA calculates a cost-of-living allowance (COLA) to compensate for the effect of inflation. The method the SSA uses to determine the COLA is widely opposed by disability rights advocates, who argue that it is a poor measure of the spending patterns of Social Security recipients, who tend to spend more on medical appointments, prescriptions, and other essential needs that have higher inflation rates than the rest of the economy.

The day after the 2021 increase was announced, two House members introduced legislation to raise next year’s COLA to 3 precent.

“This absolutely anemic COLA won’t even come close to helping [recipients] afford even their everyday expenses, let alone those exacerbated by COVID-19,” Peter DeFazio (D-Ore.) wrote in a news release.

The annual SSA COLA affects more than just benefit levels. As one example, SSI and SSDI eligibility is contingent on recipients no longer being able to adequately compete in the workforce, or perform substantial gainful activity (SGA). To determine whether a person can perform SGA, they must not be able to achieve a specified monthly income. This SGA threshold will increase from $1,260 to $1,310 per month in 2021.

Similarly, students receiving SSI can have a certain amount of money excluded without losing eligibility for the program. This threshold will increase in 2021 from $1,900 to $1,930 monthly, or $7,670 to $7,770 for the entire year.

The SSA COLA also raises premiums for Medicare Part B, which covers most regular doctor visits (Medicare Part A covers most hospital stays and related services). However, under a short-term spending bill approved by Congress on September 30, the increase in Medicare Part B premiums will be limited to a quarter of the rise based on the COLA, projected to go from $144.60 to $153.30.

Click here to read an SSA fact sheet on the upcoming changes for 2021.

Should you have any questions about Social Security Disability benefits, special needs planning or estate planning in general, contact the attorneys at Elville and Associates for a free initial consultation to discuss your situation so we can create a solution for your needs.  Or,  you may always reach out to Community Relations Director Jeff Stauffer at jeff@elvilleassociates.com, or at 443-393-7696 x117.

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