Q:

When does the Social Security cost-of-living increase go into effect?

A:

Quick Answer

The Social Security cost-of-living adjustment went into effect on Dec. 31, 2014. The Social Security COLA increases Social Security payments by 1.7 percent for benefits paid in 2015.

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Full Answer

Congress enacted COLA in 1972 along with other Social Security amendments. Annual adjustments began in 1975 and are determined by the Bureau of Labor Statistics in the Department of Labor. The Social Security COLA plan was put in place to ensure that Social Security benefits are not diminished due to a rising cost of living.

In addition to COLA, the Social Security program also includes other automatic increases. For example, if COLA is in effect, the wage cap and self-employment income subject to Social Security payroll tax also increase.

COLA does not have an effect on Medicare Part B programs. Medicare Part B premiums change, if necessary, to cover 25 percent of the estimated cost of the Medicare Part B program.

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