If you or a family member is a disabled Veteran that receives disability benefits from the VA, you need to know that the VA typically increases monthly disability payments each year. These are called cost-of-living adjustments.
While you can often anticipate an increase in your disability benefits each year, you have to wait until December to learn how much more money you’ll receive.
Read on for more information about the VA COLA 2023 increase and where it applies.
VA cost-of-living adjustments (COLA) are regular, scheduled increases to VA disability benefits.
Each year, inflation has an effect on the American economy. Inflation is an economic process by which an economy’s unit of currency, like the dollar, has less purchasing power than it did previously. Some amount of inflation is fine and a sign of healthy economic activity.
However, it also means that disabled Veterans must receive more money from their disability benefits paychecks in order to maintain the same buying ability. To compensate Veterans accordingly, the government regularly doles out VA cost-of-living adjustments.
These cost-of-living adjustments increase how much money a disabled Veteran may receive with their disability benefits.
The VA offers cost-of-living adjustments to ensure that disabled Veterans are still compensated accordingly for their service. For example, if a Veteran received $1000 per month in 2022 but inflation increased by 5%, the Veteran would need to receive $1050 for their monthly VA disability pay to have the same purchasing power.
Cost-of-living adjustments are regular and expected because inflation is a normal part of America’s economic system. That said, inflation does not increase at the same rate each year. Therefore, VA COLA increases are not the same each year, either.
In one year, the cost of living adjustment may be relatively low. In another, it could be relatively high to ensure that Veterans receive enough money to pay for medical services, food and utilities, and other necessities.
As of December 1, 2022, the VA COLA for 2023 is 8.7%. This is a year-over-year increase based on cost-of-living adjustments calculated by the US Treasury, the consumer price index (CPI), and the Department of Veterans Affairs.
This is the highest cost-of-living adjustment increase seen in the last 40 years. It is meant to reflect the increased economic turmoil experienced by many Americans.
Because of this cost-of-living adjustment, Veterans and military retirees can expect the following VA disability compensation rates depending on their disability ratings, which are determined by analyzing your service-connected disabilities:
Your disability benefits pay increases are contingent on your disability rating, whether you qualify for special monthly compensation (SMC), and whether you have any dependents, such as a spouse or children.
For more information about compensation rates for Veterans in 2023, visit the official VA.gov website to view their detailed rate tables.
As with all VA disability benefits, any money from the above compensation adjustment is tax-free at both the state and federal levels.
All VA disability monthly payments are tax-free and paid directly to Veterans with disabilities. If you receive VA disability benefits, you do not need to pay any taxes on the checks you receive from the government. If you receive more money because of the VA COLA for 2023, you don’t have to pay any extra taxes on that increased money either.
You can combine your VA disability payments with Social Security Administration (SSA) pay or Social Security Benefits as well. This is one of the smartest ways to take advantage of Veterans benefits for your military service.
Special monthly compensation (SMC) is an extra tax-free benefit that you may receive or that surviving spouses or parents may receive if the disabled Veteran dies.
Special monthly compensation is effectively a higher rate of compensation. It’s awarded to Veterans who have special circumstances, like required medical aid from a live-in nurse.
For instance, if a Veteran has a specific disability, such as paraplegia, and they require extra medical assistance, they may receive SMC to help them pay for that care.
Furthermore, spouses and surviving spouses may receive SMC if they require the aid and attendance of another person, like a live-in nurse.
The cost of living adjustment from the VA also affects special monthly compensation for service members. Special monthly compensation pay rates incorporate the 8.7% increase mentioned above.
As a result, SMC compensation for 2023 can range between $128.62 all the way up to $11,039.51, depending on your disability rating, the kind of compensation you require, whether or not you have any dependents, and beyond.
The VA will likely increase benefits again. As noted earlier, cost-of-living adjustments are based on economic inflation and other economic cycles that affect both disabled Veterans and all other Americans. So long as inflation continues to affect the power of the US dollar, it’s likely that disabled Veterans will receive cost-of-living adjustments so that they are able to pay for medical care and other daily necessities using their disability benefits.
However, disability benefits are typically confirmed in October of the preceding year. For instance, the 2023 COLA was first confirmed in October 2022. Therefore, you cannot predict how much money you will receive from the VA each year. Cost-of-living adjustments can also decrease, just as they can increase.
For instance, if inflation decreases across the overall economy, Veterans can expect their disability benefits checks to potentially decrease as well. Because of this, it’s wise to hire knowledgeable Veterans law attorneys so you are always prepared for an upcoming COLA and how it may affect your financial bottom line.
You are automatically eligible for the VA cost-of-living adjustment if you are already a disabled Veteran receiving disability benefits from the VA. You don’t have to do anything in order to take advantage of the cost of living adjustment.
Instead, you’ll see the 8.7% COLA kick in with your next disability benefits paycheck. For instance, if you would normally receive $512.37 for your disability benefits, your December 2022 disability benefits check will instead include $556.95 (the same amount of money with 8.7% added).
The 8.7% COLA will be in effect for the remainder of 2023 up until December 1, 2023. At that time, the VA will presumably make another cost-of-living adjustment, which could increase or decrease how much money you receive with each benefits disability check.
If you are already receiving VA disability benefits, the cost of living adjustment should already affect your disability payments. However, if you haven’t yet begun receiving disability benefits, your first disability check will incorporate the 8.7% increase.
You do not need to fill out extra paperwork to receive the 8.7% increase. The cost-of-living adjustment came into effect on December 1, 2022, meaning that it affects all December checks that Veterans received from the VA.
Furthermore, the cost-of-living adjustment will remain in effect until November 30, 2023, at which time another cost-of-living adjustment will kick in. You can expect the above-mentioned rates to remain in effect for every disability benefits check you receive.
In the case of backpay checks, you will receive each monthly payment with the 8.7% increase taken into account. For example, if you receive disability benefits backpay in July for the first half of the year, each of the previous paychecks will also incorporate the 8.7% increase.
In summary, all disabled Veterans will benefit from an 8.7% cost-of-living adjustment to their disability benefits from the VA in 2023. These benefits adjustments are active as of December 1, 2022, and should remain active until November 30, 2023.
Of course, you can only take advantage of these cost-of-living adjustments if you receive disability benefits from the federal government. Berry Law is well-equipped and ready to help you file a successful disability benefits claim or appeal a previous decision. We’ll help you file a VA disability claim and ensure that you understand your VA disability increase.
Contact our attorneys today for a free case evaluation and more information.
Our monthly newsletter features about important and up-to-date veterans' law news, keeping you informed about the changes that matter.