COLA 2020 Changes
Julie Provost
COLA Changes For 2020
For the latest military benefit changes for 2021, please go here.
COLA stands for Cost of Living Adjustment and is a way to increase benefit amounts in order to keep up with inflation. COLA in 2020 went up 1.6%.
Because of federal law, the COLA changes to the VA’s compensation and pension rates are the same percentage increases that social security benefits receive. Social security started automatic annual cost-of-living allowance back in 1975. This change was enacted by legislation that ties the COLA increases to the Consumer Price Index (CPI-W) of the previous year.
The last few years have shown increases in the amounts of 2.8% in 2019, 2.0% in 2018, .3% in 2017, and 0% in 2016. The largest increase in recent years was in 2009, with 5.8%.
VA Disability Rates, Veteran Pension Rates, Survivor Pension Rates, and The Parents’ Dependency and Indemnity Compensation (DIC) rates will all receive the annual COLA increase if there is one. As what happened in 2016, some years do not see an increase.
Rates should increase on December 1st of each year, and then will be reflected on the first paycheck of the new year. For 2020 rates, that meant December 31st, 2019.
If a military member has opted for the Career Status Bonus (CSB/REDUX) where they receive a $30,000 bonus when they reach their 15th year of active service, they will also have their retired pay reduced, which reduces their COLA increase by 1%. At age 62, their retired pay will be restored to the same amount paid under the High-3 system and full COLA rates will be applied to their new compensation. However, COLA will continue to be applied at the reduced rate each year following. Disability retirees as well as Reserve/Guard members who retire at age 60 or younger are exempt from all provisions of the CSB/REDUX except for the 1% COLA reduction.
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About the author
Julie Provost is a freelance writer, blogger, and owner of Soldier's Wife, Crazy Life, a support blog for military spouses. She lives in Tennessee with her National Guard husband and three boys.
