VA 2020 Compensation Rates and Cost of Living Adjustment (COLA)
On July 10, 2019, U.S. Senators Johnny Isakson and Jon Tester, introduced the Veterans’ Compensation Cost-of-Living Adjustment (COLA) Act of 2019. Last week, President Donald Trump signed this act into law. As a result, veterans can expect to see a cost of living increase impacting their VA disability compensation in 2020. Specifically, the new law increases the amount of disability compensation, dependent compensation for Gold Star families, and the clothing allowance for veterans.
VA Cost-of-Living Adjustment (COLA) and How it is Determined
VA adjusts monthly compensation amounts based on the yearly change in the cost of living as determined by the Social Security Administration (SSA). These periodic changes made to VA compensation rates allow for VA benefit amounts to increase with the rate of inflation.
The SSA bases COLA rates off of the percentage increase in the Consumer Price Index for Urban Wage Earnings and Clerical Workers from the third quarter (July, August, September) of the previous year to the third quarter of the current year. The Consumer Price Index for Wage Earnings and Clerical Workers (CPI-W) is a statistical measure of change of the prices of goods and services over time in “major expenditure groups” such as clothing, food, housing, medical care, and other entities that are typically purchased by consumers. the data from the third quarter of the previous year.
Under the new law, VA’s COLA would be equal to the amount of the adjustment given to Social Security recipients.
How Have VA Compensation Rates Changed Over the Years?
The following table reflects changes in VA compensation rates, as a result of the cost-of-living adjustment, over the past three years:
|Combined Disability Rating||2018 VA Compensation Rates||2019 VA Compensation Rates||2020 VA Compensation Rates|
Note: 2020 compensation rates shown above are estimates based upon the 1.6% Cost-of-Living increase announced by the Social Security Administration. VA has not officially released these figures as of yet.
2020 VA Cost of Living Adjustment (COLA) to Compensation Rates
In 2019, the COLA saw a 2.8 percent increase, which was the largest COLA increase since 2011 when it was 3.6 percent. It was also a significant jump from the 2 percent COLA rate increase of 2018. The 2019 VA compensation rates went into effect on December 1, 2018 and were reflected in veterans’ benefit checks starting December 31, 2018.
When Will VA’s 2020 COLA Take Effect?
The COLA rate for 2020 was announced on October 10th; however, the increase will not go into effect until December 1, 2019. At that point, veterans should see a change in the amount of monthly compensation they receive. While this year’s COLA is lower than it was in 2019, ranging closer to 1.6 percent, it will still result in an increase in benefits for veterans.
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