Will the 2025 COLA Increase Apply Only to Disability Benefits?
You probably noticed an increase in the disability benefits payment you received. The reason is a cost-of-living adjustment 2025 benefits through the Supplemental Security Income and Social Security Disability Insurance programs received in their first disability payments this year.
Many may ask: “Is COLA 2025 only for disability benefits?” This blog answers that and other questions about the COLA increase and other changes you may see in the SSDI, SSI, and other federal benefit programs. You may be surprised or have questions about how the changes affect you, so feel free to reach out to the Clauson Law Firm for help and guidance.
A few things to know about cost-of-living adjustments
Automatic annual adjustments to benefits available through disability programs of the Social Security Administration began in 1975. The purpose is to prevent the purchasing power of your benefit payments from being watered down by inflation. COLA increases occurred before 1975, but it required the passage of a law each year by Congress of a law authorizing the adjustment.
The annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to determine the adjustment, if any. There is no adjustment when the CPI-W does not show an increase.
The Social Security COLA 2025 applied to all disability benefits is 2.5%. The following shows the COLA percentage increases for the last five years:
- 2025: 2.5%
- 2024: 3.2%
- 2023: 3.2%
- 2022: 8.7%
- 2021: 5.9%
Although the 2025 COLA looks modest compared to others over the past few years, remember that higher prices have not eroded your buying power to the same extent as in the previous years.
Effect of COLA on disability benefits
The Social Security COLA 2025 increase of 2.5% had the following effect on SSI and SSDI benefit payments:
- SSDI: How much you receive each month through the SSDI program depends on your average lifetime earnings working at jobs subject to Social Security taxes. The maximum monthly benefit in 2025 is $4,018. It was $3,822 in 2024. The average monthly benefit payment in 2024 was $1,537. It now is $1,580 with the COLA for 2025.
- SSI: The maximum monthly federal benefits increased from $943 for individuals and $1,415 for couples in 2024 to $967 for individuals and $1,450 for couples in 2025.
Social Security retirement benefits paid to retirees also received a 2.5% COLA increase in 2025 that went into effect on January 1, 2025. People who receive benefits through programs administered by the Social Security Administration are not the only group who will get a COLA increase in 2025.
Other benefit recipients eligible for 2025 COLA
Social Security benefits automatically adjust each year based on increases in the cost of living, but VA benefits do not receive a COLA without approval from Congress. Congress approved the legislation for a 2025 COLA increase in VA benefits matching the percentage received by recipients of Social Security benefits.
The cost-of-living adjustment 2025 benefits those receiving disability compensation, spouse and children compensation, clothing allowance, and other benefits payable through the VA. The 2025 COLA matches the 2.5% given to recipients of SSDI, SSI, and retirement benefits through the Social Security Administration.
VA and Social Security benefits recipients are not alone in receiving a COLA for 2025. A 2.5% COLA increase in 2025 also went to retired railroad workers who receive benefits through the federal Railroad Retirement Act and federal civil service retirees.
What else does 2025 bring for SSDI and SSI? The Social Security COLA 2025 increase for disability and retirement benefits is not the only change you may find whether applying for benefits or already receiving them.
Change to substantial gainful activity limit for 2025
To be disabled and eligible for disability benefits through SSDI and SSI, you must be unable to do substantial gainful activity (SGA) because of a medically determinable physical or mental impairment expected to last or that has lasted for at least 12 months or is expected to result in death. According to federal regulations followed by the Social Security Administration in determining whether you are disabled, SGA is work requiring significant physical or mental activity usually done for pay or profit.
Social Security uses monthly earnings from working to determine if a person is doing SGA. An SGA limit is set each year based on the national average wage index. Changes may be made yearly based on fluctuations in the index.
The 2024 SGA limit was $1,550 for someone disabled and not statutorily blind. A person applying for or receiving SSI or SSDI because they are statutorily blind had an SGA limit of $2,590. The limits changed in 2025 to $2,700 for a person who is blind and $1,620 for those who are disabled for conditions other than blindness.
If you earn more than the SGA limit when working during the application review process, you will not meet the disability standard to be approved for disability benefits. SGA limits also affect individuals working under a trial work period while receiving SSDI benefits.
Increases affecting trial work periods
The Social Security Administration encourages you to test your ability to return to work through a trial work period of nine months. The nine months need not be consecutively used. You have 60 months to use them.
During a trial period, you can earn as much money as you wish, even exceeding the SGA limit, without affecting your eligibility for SSDI benefits. During the trial work period, you keep your earnings and continue to receive disability benefits through SSDI.
2025 brings changes to the monthly earnings from working that make a month count as part of the trial work period. Once you notify the Social Security Administration that you want to attempt a return to work under a trial work period, any month you have more than $1,160 in gross earnings counts as one of the nine months you’re allowed. A trial month in 2024 was any month that your gross earnings exceeded $1,110.
Students receiving SSI benefits have higher earnings exclusions in 2025
Blind or disabled recipients of SSI benefits who are younger than 22 and still going to school can work and exclude some of their earnings from counting against their SSI benefits. This can be a big deal because earned income from working usually counts toward reducing your monthly SSI benefit payment.
It’s not a dollar-for-dollar reduction. Instead, you may exclude the first $65 from your monthly earnings, with one-half of the remainder counted against your SSI benefits. Students regularly attending primary or secondary school, university, or college or participating in a course of study at a vocational or technical training school can work and exclude a portion of their monthly earnings.
The monthly exclusion in 2024 was $2,290, with an annual limit of $9,230. This year, the exclusion amounts got the same COLA increase 2025 disability benefits received. The 2025 exclusion became $2,350 per month with an annual maximum of $9,460.
You may wonder how the monthly exclusion for 2025 became $2,350 when a 2.5% increase applied to the 2024 exclusion does not result in an even number. The reason is the Social Security COLA 2025 calculation rounds the result to the nearest multiple of $10. The calculation also uses the unrounded 2024 monthly amount of $2290.63, with the result being $2,347.90, which is rounded to $2,350. The same rounding method is used for the calculation of the annual maximum.
It takes more earnings for a work credit in 2025
You need to work long enough and recently enough to qualify for SSDI. The Social Security Administration uses work credits to determine if you meet the eligibility standard. You generally need 40 work credits, with 20 earned within 10 years of the onset of your disability, to be eligible for SSDI. Workers who become disabled when they are young may need fewer credits.
Work credits are earned based on your earnings. In 2024, a work credit was earned for every $1,730 you had earned from working up to a maximum of four per year. Social Security adjusted the earnings required for 2025 based on the national percentage increase in average wages, so it now requires earnings of $1,810 for you to earn one work credit.
Social Security COLA 2025 and Medicare
If you qualify for disability benefits through SSDI, you become eligible for health insurance coverage through Medicare after a 24-month waiting period from when you begin receiving monthly benefit payments. Medicare Part A hospital coverage is available without payment of a premium. Part B coverage, medical insurance, is also available, provided you pay a premium.
The Medicare Part B monthly premium was $174.70 in 2024. It increased in 2025 to $185 per month.
Learn more about 2025 COLA and other changes to disability benefits
The cost-of-living adjustment 2025 benefits received is only one of the several changes to Social Security disability benefits and other federal benefit programs. If you have questions about your benefits, need assistance with an application, or require representation to appeal a denial or termination of benefits, contact the Clauson Law Firm for a free consultation.
