Veterans could see a major cost-of-living increase to their benefits this year.
The U.S. House of Representatives passed a bill Monday that would again tie the cost-of-living boost for Veterans benefits to this year’s cost-of-living adjustment, or COLA, for Social Security recipients. The bill, which already passed in the U.S. Senate, will now head to President Joe Biden’s desk.
If signed into law, it could mean a big increase for Veterans benefits as some experts have predicted this year’s Social Security COLA could be the largest in decades. Here’s what to know.
What the bill would do
The bill would require that, whenever there is a cost-of-living increase for Social Security recipients, the Department of Veterans Affairs increase the benefits paid to Veterans by the same percentage.
It would increase the “amounts payable for Veterans’ disability compensation, additional compensation for dependents, the clothing allowance for certain disabled Veterans and dependency and indemnity compensation for surviving spouses and children,” according to the bill’s summary.
The Social Security COLA is automatic each year, but lawmakers must separately approve an increase to Veterans benefits annually, according to The Military Times. The bill to do so typically passes without opposition, but efforts to permanently link the increase to the Social Security boost have been unsuccessful.
If signed into law, the bill would go into effect for benefits starting in December.
How much will benefits increase?
That’s still unknown.
It depends on how much Social Security benefits increase, and the Social Security Administration (SSA) has said it won’t announce next year’s COLA until October.
Since 1975, the SSA administration has increased Social Security’s “general benefit” based on increases in cost of living as measured by the Consumer Price Index, which is “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.”
Last year, the SSA decided on a 1.3% COLA. The Military Times reports the increase hasn’t been over 3% since 2011 and has averaged less than 1.3% over the past six years.
Predictions on the increase
Some experts have predicted this year’s COLA could be the highest in decades — which would translate to a big increase in benefits for Veterans as well.
“Estimates for the 2022 COLA range from 5.8 percent from economist Bill McBride, who writes the finance and economics blog Calculated Risk, to 6 to 6.2 percent from The Senior Citizens League,” the AARP wrote in a blog post earlier this month. “Moody’s Analytics estimates the 2022 COLA at 5.6 percent. Stephen Goss, SSA’s chief actuary, says the COLA will be close to 6 percent.”
The Senior Citizens League said in August its estimated 6.2% increase would be the highest in nearly four decades.
“The estimate is significant because the COLA is based on the average of the July, August and September CPI data,” Mary Johnson, a Social Security policy analyst for The Senior Citizens League, said. “With one third of the data needed to calculate the COLA already in, it increasingly appears that the COLA for 2022 will be the highest paid since 1983 when it was 7.4%.”
David Certner, legislative counsel and director of legislative policy for government affairs at AARP, said in the blog post that the COLA will “no doubt be higher than it has been for the last decade” because of rising prices.
Why it matters
Rep. Mike Bost, a Republican from Illinois and ranking member of the House Committee on Veterans’ Affairs, said in a statement that many Veterans rely on disability compensation to “make ends meet.”
“This was especially true during the pandemic,” Bost wrote. “For millions of Veterans and their families, this adjustment is more important now than ever before.”
Rep. Mark Takano, a Democrat from California and committee chairperson, called the cost-of-living adjustment “so much more than a rate adjustment tied to inflation.”
“It is a quality-of-life guarantee in the retirement years for Veterans suffering with service-connected disabilities and ailment,” he said. “It also comes with the assurance for Veterans that their survivors will not see a steady decline in benefits if the economy changes and costs rise after they have passed.”
Takano noted to The Hill that Congress enacted the adjustment well ahead of the December deadline.
“I am pleased we are considering this bill early this year so Veterans will not be concerned about its passage by the Dec. 1 deadline,” Takano said. “This is especially important with so many feeling the economic effects of the COVID-19 pandemic.”