Cost of Living Adjustment (COLA): Understanding Cost of Living Adjustment (COLA)

Let's look at an example determining if a child support order is eligible for a Cost of Living Adjustment:

Example Case: Tamara

In 1998, the court established Tamara and her daughter's child support.  Beginning in 2000, the support order has been reviewed to determine its eligibility for a Cost of Living Adjustment.  In 2001, their support order qualified for an adjustment.

When a child support order is two years old, it is reviewed automatically for a COLA adjustment.  The child support order is eligible for an adjustment once the sum of averages is equal to or greater than 10%. The chart below outlines Tamara's example:

Year	COLA	Sum of Averages (until at least 10%)
1998	1.6%	(Not eligible at this review period. Sum of averages must be at least 10%.)
1999	3.8%	(1998 = 1.6%) + (1999 = 2.2%) = 3.8% (Not eligible at this review period. Sum of averages must be at least 10%.)
2000	7.2%	(1999 = 3.8%) + (2000 = 3.4%) = 7.2% (Not eligible at this review period. Sum of averages must be at least 10%.)
2001	10%	(2000 review = 7.2%) + (2001 = 2.8%) = 10% (Eligible this review period. Sum of averages is at least 10%.)

In 2001, Tamara's order is eligible for a COLA. So, her monthly basic child support obligation amount would be multiplied by 10%, and this amount would be added to the obligation amount. For example, if her monthly amount is $500, then the COLA would be: $500 x 10% = $50. The $50 is then added to the $500 for a new obligation amount of $550.