SSDI payments rose 8.7 percent in January 2023

Social Security Disability Insurance (SSDI) payments increased by 8.7 percent on January 1, 2023. This was the largest Cost of Living Adjustment (COLA) in four decades. The increase applied to all SSDI beneficiaries automatically — you did not need to do anything to receive it.

The 8.7 percent figure came from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation. Social Security calculates COLA each October based on inflation data from July, August, and September. Because inflation was exceptionally high in those months of 2022, the 2023 COLA was much larger than the typical adjustment, which usually ranges from 1 to 3 percent.

If you received SSDI in December 2022, your January 2023 payment reflected the 8.7 percent increase. For example, if your monthly benefit was $1,000 in December 2022, it became $1,087 in January 2023. The exact dollar amount of your increase depended on what you were receiving before the adjustment.

Key Takeaways

  • SSDI payments increased 8.7 percent in January 2023, the largest adjustment since 1981.
  • The increase was automatic and applied to all beneficiaries without requiring any action on your part.
  • COLA is calculated each year based on inflation data from the previous summer and takes effect every January.
  • Your new payment amount appears on your January benefit check or direct deposit; Social Security sends a notice in December explaining the increase.

How COLA is calculated and why it varies year to year

Social Security calculates COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which tracks the cost of goods and services that working people buy. The Social Security Administration compares the average CPI-W for July, August, and September of the current year to the same three months of the previous year. If there is an increase, beneficiaries receive a COLA equal to that percentage.

The COLA varies from year to year because it depends entirely on inflation. In years when inflation is low, COLA is low or nonexistent. In 2010, 2011, and 2016, there was no COLA at all because inflation was flat or negative. In 2022, COLA was 5.9 percent. In 2023, it jumped to 8.7 percent because inflation spiked sharply in mid-2022. In 2024, COLA was 3.2 percent as inflation cooled.

You cannot predict COLA in advance with certainty, but you can watch inflation trends. If the CPI-W is rising, COLA will likely rise. Social Security announces the COLA figure in October each year, so you know the exact percentage before your January payment changes.

What happened to Medicare premiums when SSDI increased in 2023

Many SSDI beneficiaries also receive Medicare. When COLA increases, Medicare Part B premiums (which cover doctor visits and outpatient care) sometimes increase as well. However, federal law includes a hold-harmless provision that protects most beneficiaries: your Social Security payment cannot decrease because of a Medicare premium increase.

Here is how it works: if your COLA increase is smaller than your Medicare premium increase, Social Security holds your payment flat rather than letting it drop. The difference is covered by the Medicare trust fund. In 2023, the hold-harmless rule protected most beneficiaries because the 8.7 percent COLA was much larger than the Medicare premium increase.

However, beneficiaries who were not yet receiving Social Security in 2015 (when the hold-harmless rule was last applied broadly) may not be protected. If you are unsure whether you are covered, contact Social Security at 1-800-772-1213 to ask whether the hold-harmless rule applies to you.

How to find out your exact 2023 payment amount

Social Security mailed a notice in December 2022 to every beneficiary, explaining the 8.7 percent increase and showing the new monthly payment amount. If you did not receive this notice, you can view your payment information online through my Social Security, the official Social Security account portal at ssa.gov.

To log in to my Social Security, you need a username and password or a Social Security account linked to a login.gov account. Once logged in, you can see your current monthly benefit amount, your payment history, and your earnings record. If you do not have an online account, you can create one at ssa.gov/myaccount.

You can also call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) to ask about your specific payment amount. Have your Social Security number ready. Wait times are typically shorter early in the morning or later in the afternoon.

Why 2023 was unusual and what to expect going forward

The 8.7 percent COLA in 2023 was exceptional. It was the result of rapid inflation in 2021 and 2022, driven by pandemic-related supply chain disruptions, government spending, and energy price spikes. Most years, COLA is much smaller — between 1 and 3 percent. In some years, there is no COLA at all.

Going forward, COLA will depend on inflation trends. If inflation remains moderate, COLA will likely return to historical levels of 2 to 3 percent. If inflation rises again, COLA could be higher. If inflation falls below the previous year's level, there may be no COLA. Social Security has no control over COLA; it is determined entirely by the Consumer Price Index.

You should not count on another 8.7 percent increase. Plan your budget based on your current payment amount and assume COLA will be 2 to 3 percent in future years. If COLA is higher, that is a bonus. If it is lower or zero, you will not be caught off guard.

How the 2023 increase affected your taxes and other benefits

The 8.7 percent increase in SSDI may have affected your federal income taxes if you also receive other income. SSDI itself is not taxable, but if your total income (including wages, interest, or other benefits) exceeds certain thresholds, up to 85 percent of your Social Security benefits can become taxable. The 2023 COLA increase pushed some beneficiaries over those thresholds.

The increase also may have affected your Medicaid or Supplemental Security Income (SSI) if you receive either of those programs. Medicaid and SSI have income limits that vary by state. A higher SSDI payment could push you over the limit in some states, though most states have protections for people who were already receiving both programs before the increase. Contact your state Medicaid office or your local Social Security office to ask whether the 2023 increase affected your other benefits.

If you work and receive SSDI, the increase may have affected your work incentive calculations. Some work incentives, like the Student Earned Income Exclusion or the Plan to Achieve Self-Support (PASS), have limits tied to your benefit amount. A higher benefit may have changed what you can earn without affecting your SSDI payment. Ask your work incentives planning and information (WIPA) project or your Social Security representative to recalculate your work limits.

Frequently Asked Questions

Will SSDI get another big raise in 2024 or 2025?

COLA for 2024 was 3.2 percent, much smaller than 2023. For 2025, Social Security announced a 3.2 percent COLA. These are closer to historical averages. Future COLA depends on inflation, which changes month to month. Social Security announces each year's COLA in October, so you will know the exact figure before it takes effect in January.

Do I have to report the increase to Social Security or other agencies?

No. The increase is automatic and does not require any action or reporting on your part. If you receive Medicaid, SSI, or other means-tested benefits, you may need to report the increase to those programs, but Social Security handles the SSDI increase itself. Contact your state Medicaid office or local Social Security office if you are unsure whether you need to report it elsewhere.

What if I disagree with the amount of my increase?

COLA is calculated by law using the Consumer Price Index; Social Security does not have discretion to change it. If you believe your payment amount is wrong for a different reason — such as an error in your earnings record or a miscalculation of your benefit — you can request a recalculation. Call Social Security at 1-800-772-1213 to ask about your specific situation.

Does the increase explore if I am receiving SSDI as a family member of a disabled worker?

Yes. COLA applies to all SSDI beneficiaries, including spouses, ex-spouses, and children of disabled workers. Each person's payment increases by the same percentage. If you are the parent of a disabled adult child receiving SSDI, your child's payment increased by 8.7 percent in 2023, but your own payment (if you receive it) is based on your own benefit calculation.