The cost-of-living adjustment, or COLA, is a periodic change in Social Security benefits. The COLA rate is determined by the Consumer Price Index (CPI). This rate is used to determine the amount of change in benefits needed to keep up with rising costs. In layman’s terms, the COLA rate is designed to ensure that the purchasing power of Social Security income doesn’t erode due to inflation or the increased cost of goods and services.
The history of COLA dates back to the Social Security Amendments of 1972, which were signed into law by President Richard Nixon. This legislation provided automatic annual COLA increases based on annual increases in the CPI. Before this law, Congress had to intervene to ensure Social Security beneficiaries received increases in line with inflation. The 1972 act aimed to automate this process so that rising prices would not diminish a beneficiary’s Social Security income.
Understanding the financial challenges that high inflation posed, when Congress passed the Social Security Amendments of 1972, they included provisions for the VA to adjust veterans’ benefits in tandem with the COLA rate applied to Social Security benefits. Congress does this yearly through Veterans Compensation Cost-of-Living Adjustment (COLA) Acts.
The Veterans Compensation Cost-of-Living Adjustment Act of 2023
The COLA Act of 2023 was one of several COLA (Cost-of-Living Adjustment) Acts passed over the years to ensure that veterans’ compensation benefits remain in line with inflation. President Biden signed the Veterans Compensation Cost-of-Living Adjustment (COLA) Act of 2023 this year. This means that veterans and their dependents will see an increase in their 2024 benefits.
How Does COLA Impact VA Benefits?
Veterans have dedicated a significant portion of their lives to safeguarding our nation. They deserve unwavering support and care upon completing their service. It’s a mark of gratitude and a duty we owe to those who’ve sacrificed for our freedoms.
VA compensation benefits play a pivotal role in supporting veterans. These are monthly payments to veterans with service-connected disabilities. Or illnesses or injuries incurred during or aggravated by their active military service.
These benefits act as a tangible acknowledgment of the physical and emotional tolls of service. It is a sign of our nation’s commitment to supporting veterans in their civilian lives.
When you hear the term “VA COLA increase,” it refers to the cost of living adjustment VA disability benefit recipients are entitled. The rate indicates how much the Veterans Administration (VA) is raising its benefit payouts to meet current economic conditions. With prices of goods and services increasing over time, the COLA adjustment ensures veterans’ benefits remain consistent with living standards.
To determine a veteran’s current compensation, you need the following:
Veterans can calculate the projected increase by reviewing the VA’s disability compensation rates and multiplying that by the COLA rate increase.
Which VA Benefits Are Impacted by the COLA Increase?
The ripple effect of the COLA rate impacts various VA benefits. These include:
- Disability Compensation: Veterans partially or wholly disabled for service-connected reasons receive this compensation. An increase ensures they continue to maintain their standard of living despite inflation.
- Monthly Clothing Allowances: Disabled veterans might require special clothing or wear out their clothing faster due to their disabilities. The COLA increase ensures they receive adequate compensation for these clothing needs.
- DIC Benefits: Known formally as Dependency and Indemnity Compensation, DIC benefits are for surviving spouses and children. An increase here ensures that these family members are adequately cared for, especially when losing their loved one.
What is the 2024 COLA rate?
The COLA rate can vary from year to year. In some years, if there is no inflation or deflation, the COLA might be zero, meaning there would be no increase in benefits.
The 2023 VA COLA increase witnessed an impressive 8.7% rise. This increase meant veterans receiving VA disability compensation would receive a comparable increase in their monthly benefits, making a significant difference in their financial well-being.
As we await the Social Security COLA increase 2024 announcement, speculation suggests a projected rate of around 3%. With the COLA Act firmly in place, veterans and their families can look forward to another increase starting in January 2024.
Are you getting the proper compensation?
Have you been denied benefits or wish to appeal your rating decision? Speak with an experienced VA attorney. Call (800) 861-7262 to schedule a free consultation, or fill out the contact form on our site.