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  4.  » What is a COLA clause?

When creating your child support agreement, the court may add some different clauses into it. These clauses can address extra things beyond the general child support guidelines.

According to FindLaw, one additional clause that may go into your agreement is a cost of living adjustment.

COLA clause

A COLA clause will automatically adjust your child support obligation or payment depending on the cost of living increase the government releases. Instead of having to go back to court in the future to adjust your child support for inflation, the COLA clause allows for it to automatically happen. This can save you time and money in the long run.

About COLA

The COLA comes from economic factors, mainly the Consumer Price Index. The government uses it to adjust government benefits, such as Social Security payments.

The COLA does not always increase, but it never decreases. It depends on the economic conditions over the previous year. Some years the increase can be rather large, but usually, it is in the lower single digits.

Using COLA in child support

Using COLA in a child support agreement can allow for regular increases in payments that are relative to the changes in the general cost of things a parent would use to spend child support on. It does not, however, account for actual changes in expenses.

A COLA clause is useful if you expect no major increases in the costs of caring for your child. However, if you have a significant change in expenses or costs, you may still need to go back to court for a modification despite having this clause.

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