TN 9 (04-04)

A. Introduction

In 10/99 the Bureau of Labor Statistics (BLS) released a Consumer Price Index (CPI) amount that resulted in SSA establishing a COLA of 2.4% effective 12/99. In 9/00 the BLS announced the discovery of an error in the software used to compute the earlier CPI amount. If not for this error SSA's COLA for 12/99 would have been 2.5%. As a result of special legislation concerning this error, in 7/01 SSA adjusted the COLA for those affected and made a special one-time payment to make up for any shortfall they experienced from 12/99 through 6/01. All payments made before 7/01 were based on the 2.4% increase and are considered to be correct. They will remain posted as paid. This section explains the July 2001 increase. All information about the special one-time payment is now in RS 00601.123.

B. Procedure -- How to Determine the 7/01 Rate

The 7/01 COLA affects only those with an eligibility year prior to 2000. The 7/01 COLA did not increase benefits for those eligible after 1999. The Interactive Computation Facility program 15 will compute the increase for 7/01. See MSOM ICFT2 015.001 for instructions. To determine the increase in 7/01 manually take the following steps:

1. Deconvert the 06/01 PIA or maximum back to 11/99

1. Divide the 06/01 PIA or maximum by 1.035

2. Round up to dime

3. Divide the answer by 1.024

4. Round up to dime

5. The result is the 11/99 PIA or maximum to be used to determine the 07/01 PIA or maximum.

2. Apply the corrected COLAs for 12/99 and 12/00

1. Multiply the deconverted 11/99 PIA or maximum by 1.025

2. Round down to dime

3. Multiply the answer by 1.035

4. Round down to dime

5. The result is the PIA or maximum for 07/01