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Social Security’s 2020 COLA Increase

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2020 COLA

Each year the U.S. Social Security Administration calculates an adjustment in the cost of living (COLA). The 2020 COLA increase has now been set at 1.6%. That means that, starting January 1, 2020, a number of changes will cascade through the benefit structure. How will the 2020 COLA increase affect you, or your family member?

Supplemental Security Income (SSI)

The maximum monthly SSI benefit will increase on January 1 from the current $771 to $783. That increase will leave beneficiaries barely able to cover the costs of food and shelter, if that. It is not based on any calculation that the average person requires less than $800 per month to keep body and soul together. Instead, it is a steady set of increases from the 1975 figure of just over $150/month. Want to know the history of SSI monthly rates and increases? The Social Security Administration keeps track online.

If both members of a married couple are eligible for SSI benefits, the maximum is not twice that $783 figure. A married couple’s total monthly benefit will increase January 1, 2020, from $1,157 to $1,175.

SSI “In-kind support and maintenance”

One common scenario we deal with is the SSI recipient who gets room and board paid for from some other source. It might be a parent allowing their SSI-recipient child to live at home with charging rent, or a special needs trust that pays housing and food costs. In either case, the maximum reduction in the SSI benefit (for a single person) will now go from $277 to $281.

Here’s how that last calculation works: if someone provides food or shelter for an SSI recipient, the SSI may be reduced by what’s called the “presumed maximum value” rule. That rule imposes a reduction of 1/3 of the maximum SSI benefit plus $20. Why that figure, and not something else? There is no good reason — it’s just what happens. And it doesn’t matter how much SSI the beneficiary actually receives; the reduction is based on the maximum SSI benefit. So: let your SSI-recipient child live at home without paying rent, and they should see a $281 reduction in their SSI benefit after the first of next year. Want to understand this better? Check out the “Handbook for Trustees” published by the Special Needs Alliance for more explanation.

SSI asset limitations

So how much did the $2,000 asset limitation for SSI beneficiaries increase? The same amount as last year, and for every year since 1989. That increase: $0. Again.

Had the $2,000 SSI asset limitation increased with inflation, it would now be above $8,000. That didn’t happen.

Social Security Retirement and Disability benefits

For other people receiving checks from Social Security, they should be able to project their 2020 benefit rate by adding 1.6% to their current payment. Of course, it’s not always that simple; payments taken out of Social Security might change, and the interrelationship of other calculations might change the answer for an individual. But you should get a notice from Social Security just before the end of the year with more details. In fact, if you’re like most of the people we see, you’ll get several notices — and they may seem to be inconsistent and hard to understand. Hold on to them and read them all together in order to get the full picture.

There are some things we can know, however. The average Social Security retirement payment will probably increase from its current $1,479 per month to about $1,503. The average Social Security monthly disability payment will likely increase from about $1,238 to about $1,258.

Meanwhile, the maximum Social Security retirement monthly benefit will increase from $2,861 in 2019 to $3,011 in 2020. That’s for retirees retiring at their “full retirement age” (currently 66). If you wait until age 70 to begin receiving Social Security retirement benefits, that maximum goes from $3,776 to $3,914.

Other program adjustments

The 2020 COLA increase affects more than just the amount of benefit payments. It also affects a number of program calculations that determine whether you can receive disability-based payments at all, and how much money you can earn before triggering changes (for instance). Here are some of the more salient details:

Quarters of coverage

Some of your Social Security benefits depend on how much time you’ve spent in the work force. That calculation, in turn, depends on how much you’ve earned in each calendar year. The minimum earnings required to get credits depends on what Social Security calls a “quarter of coverage.” That number goes from 2019’s $1,360 to $1,410 in 2020.

The quarter of coverage is a little bit confusing, and its name doesn’t help. If you earn, say, $3,000 from employment in all of 2020, you will get two “quarters of coverage” — regardless of when in the year you earn your income. Earn $3,000 in January and stop working, and you’ll get two quarters of coverage. Earn $5,640 in January and you’ll get credit for four quarters of coverage — whether you keep working or not. After you’ve gotten your four quarters of coverage, nothing you do the rest of the year will increase your quarter-of-coverage credits.

Substantial gainful activity

Another 2020 COLA increase that affects many of our clients is in what’s almost universally called SGA. Substantial gainful activity tests whether you are disabled — but it, too, is confusing. If you can earn the SGA level, then (generally speaking — there are plenty of exceptions and qualifications) you are not disabled.

The SGA level for 2019 was $1,220 per month for most people. It will go up to $1,260 for 2020. There are different (higher) numbers for the legally blind worker (they can earn $2,110 in 2020 without losing their status as “disabled”).

But the SGA number is often misunderstood. It is not correct to say that a person with a disability can earn up to the SGA without losing their disability status. It is the ability to earn a higher monthly income that can trigger the loss of disability payments. In other words, if you work enough to earn $1,250 in 2020 and then stop — you may still lose your disability-based benefits if you could have earned ten dollars more.

Don’t panic. There are plenty of limitations on the loss of benefits, and plenty of ways to earn more for a limited period of time. If you are in this area, look to (and figure out) the notion of a “trial work period” for starters. That discussion is beyond our review of the 2020 COLA increases, but it can be terrifically helpful for people with disability benefits and a desire to get back into the workplace.

ABLE Act accounts

As you may already realize, a person whose disability was established before age 26 may qualify to have an ABLE Act account established for their benefit. The maximum amount that could be contributed to that account in 2019 (with one important exception) was $15,000. After the 2020 COLA increase, that figure for 2020 will be: $15,000.

That’s right. No increase at all. That’s because the maximum figure is keyed to a tax-related number that increases only in $1,000 increments, and it didn’t reach that threshold this year. We’ll see whether it goes to $16,000 next year.

How about taxes?

The 1.6% 2020 COLA increase will also affect estate, gift and generation-skipping transfer taxes. The threshold figure for those three numbers will go from $11.4 million to — we don’t know yet. But expect that number to be about $11.58 million. We’ll update you when the Treasury Department has released its calculation.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

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Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.