Each October, the Social Security Administration (SSA) releases the upcoming year’s Cost of Living Adjustment (COLA) for recipients of Social Security benefits and Supplemental Security Income (SSI). This adjustment reflects the changes in common household expenses over the past twelve months and factors in information from the Consumer Price Index for Urban Wage Earners (CPI-W). The COLA is effective on January 1 of the following year.
The COLA amount varies from year to year, but it is offered as a percentage; the number represents how much more money a SSA beneficiary will receive in the coming year. Many affordable housing compliance professionals are unsure about how to reflect this change in certifications they are processing, as it will not take effect until next year. Fortunately, the Housing Opportunity Through Modernization Act (HOTMA) has made it clear how affordable housing communities should process the COLA in such situations.
Scenario 1: Certification Completed Before COLA is Published
It is October 6th, and a certification effective January 1st is ready to be finalized; however, the COLA has not yet been published.
If the certification is ready and there is no known factor to apply, complete the certification using the current amounts to project the upcoming year’s income.
| Current benefit amount: | $2,028 |
| Multiply by twelve months: | × 12 |
| Projected annual income: | $24,336 |
Scenario 2: Certification Completed After COLA is Published
It is November 3rd, and a certification effective January 1st is ready to be finalized following the publication of the 2.8% COLA.
Once HOTMA has been implemented at your site, you will need to include the SS COLA for all certifications effective January 1 of the year or later (that are not yet finalized by the date the COLA is published). This is described in Notice H 2023-10, Section B.3, page 35.
| Current benefit amount: | $1,982 |
| Multiply by the COLA percentage to determine the increase: | × 2.8% |
| Determine the increase (rounded to the nearest penny): | $55.50 |
| Take the current benefit: | $1,982 |
| Add the increase: | + $55.50 |
| This is the new benefit amount: | $2,037.50 |
| Take the new benefit amount: | $2,037.50 |
| Multiply by twelve months: | × 12 |
| Projected annual income: | $24,450 |
Scenario 3: Certification Effective Before COLA Takes Effect
It is December 5th, after the 2.8% COLA has been published, and the move-in certification is effective today. This requires special attention.
Calculate the income for the twelve months following the effective date of the certification. Include one month at the current rate and the remaining eleven months at the new rate.
| Current benefit amount: | $1,990.10 |
| Multiply by the COLA to determine the increase: | × 2.8% |
| Determine the increase (rounded to the nearest penny): | $55.73 |
| Take the current benefit: | $1,990.10 |
| Add the increase: | + $55.73 |
| This is the new benefit amount: | $2,045.83 |
| Take the new benefit amount: | $2,045.83 |
| Multiply by eleven months: | × 11 |
| Eleven months’ income (Jan through Nov): | $22,504.13 |
| Add the December benefit amount: | $1,990.10 |
| And the benefit for Jan through Nov: | + $22,504.13 |
| Projected annual income: | $24,494.23 |
We hope this helps simplify the different ways the COLA will be reflected in your calculations. In each scenario, we must remember to apply all known anticipated changes on the tenant certifications.
Keep a lookout for a blog from us each year when the COLA is announced. Have a great rest of 2025!