The 2023 COLA raised SSDI payments by 8.7 percent, the largest increase in four decades

In October 2022, the Social Security Administration announced that SSDI benefits would increase by 8.7 percent effective January 2023. This was the largest annual adjustment since 1981. The increase reflected inflation measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2021 through the third quarter of 2022.

The 8.7 percent figure applied to all SSDI beneficiaries — both workers receiving Disabled Worker benefits and family members receiving benefits on a disabled worker's record. The actual dollar amount you received depended on your individual benefit rate, which is calculated based on your lifetime earnings record and the age at which you became disabled.

This COLA was unusual because inflation had spiked sharply in 2022 after remaining low for years. Most beneficiaries had seen annual adjustments of 1 to 2 percent throughout the 2010s. The 8.7 percent jump meant that someone receiving $1,200 per month in December 2022 would receive approximately $1,304 per month starting in January 2023.

Key Takeaways

  • The 2023 COLA of 8.7 percent was the largest annual increase since 1981 and reflected rapid inflation in 2021 and 2022.
  • The increase applied automatically to all SSDI beneficiaries on the rolls as of December 2022; no action was required to receive it.
  • The new payment amount appeared on your January 2023 benefit statement and in your online Social Security account.
  • The COLA affected not only your monthly benefit but also the earnings limit for Substantial Gainful Activity (SGA) and other program thresholds starting in 2023.

How the 2023 COLA was calculated

The Social Security Administration calculates the annual COLA by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the current year to the third quarter of the previous year. For 2023, SSA compared July, August, and September 2022 prices to July, August, and September 2021 prices. The result was an 8.7 percent increase.

This method has been used since 1975. It measures inflation across a broad basket of goods and services — food, housing, transportation, medical care, and other expenses — that urban workers typically purchase. The CPI-W does not measure inflation for rural workers or retirees specifically, but it is the index Congress chose in the Social Security Amendments of 1972 to adjust all Social Security and SSDI benefits.

The announcement of the 2023 COLA came in October 2022, giving beneficiaries and the Social Security Administration time to prepare. The increase took effect on the first day of the month following the announcement — January 1, 2023 — which is standard practice for all annual COLAs.

What changed in your monthly payment

Your SSDI benefit amount in January 2023 was 8.7 percent higher than your December 2022 amount. If you received direct deposit, the new amount appeared in your bank account on the third day of the month (or the first business day after, depending on your bank). If you received a check, it arrived by mail with the new amount printed on it.

You did not need to do anything to receive the increase. The Social Security Administration applied the COLA automatically to everyone on the SSDI rolls as of December 2022. If you had been removed from the rolls before December 2022 — for example, because your case was closed due to work activity or medical improvement — you would not have received the 2023 COLA unless you were reinstated before the effective date.

The increase also applied to any family members receiving benefits on your record, such as a spouse or child. Each family member's benefit was raised by 8.7 percent, though the total family benefit maximum (which limits the total amount all family members can receive together) was also adjusted upward.

How the 2023 COLA affected work incentives and program rules

The COLA does not affect only your monthly payment. It also adjusts several program thresholds and limits that determine how much you can earn while remaining on SSDI. The most important of these is the Substantial Gainful Activity (SGA) limit, which is the earnings threshold above which Social Security considers you to be working at a level that demonstrates you are no longer disabled.

For 2023, the SGA limit for non-blind workers was $1,470 per month. This was higher than the 2022 limit of $1,350 per month, an increase of $120. If you earned more than $1,470 per month on average, Social Security could find that you had engaged in SGA and could terminate your benefits, even if you reported the work. The SGA limit for blind workers was $2,460 per month in 2023, up from $2,260 in 2022.

The Trial Work Period (TWP) and Extended may be able to access Period (EEP) were not affected by the COLA in terms of their length — the TWP remains nine months and the EEP remains 36 months — but the dollar amounts you could earn during these periods without affecting your benefits were adjusted. Additionally, the Student Earned Income Exclusion (SEIE), which allows students under 22 to exclude up to $2,170 per month in 2023 (up from $2,000 in 2022), was also increased.

Why 2023 was different from previous years

The 2023 COLA of 8.7 percent stood out because inflation had been unusually high in 2021 and 2022. From 2009 through 2020, annual COLAs ranged from 0 percent (in 2010 and 2011) to 2.8 percent (in 2018). Beneficiaries had grown accustomed to small increases or no increase at all. The jump to 8.7 percent reflected the rapid rise in prices for gasoline, food, housing, and other essentials during the pandemic recovery.

The timing of the COLA announcement — October 2022 — meant that beneficiaries learned about the increase before the end of the year. This allowed people to plan for the higher payment and helped Social Security prepare its systems for the change. Some beneficiaries used the increase to catch up on bills or medical expenses that had accumulated during the period of lower COLAs.

The 2023 COLA also highlighted the lag built into the COLA system. Because the calculation uses data from the third quarter of the previous year, the COLA announced in October 2022 reflected inflation from mid-2021 through mid-2022. By the time the increase took effect in January 2023, inflation had continued to rise and then begin to moderate, so the COLA did not perfectly match the inflation beneficiaries experienced in late 2022 and early 2023.

How to verify your 2023 benefit amount

You can confirm that your 2023 COLA was applied correctly by checking your benefit statement. If you receive direct deposit, your bank statement will show the new amount starting in January 2023. You can also log into your Social Security account at ssa.gov to view your benefit history and current payment amount.

Your official benefit statement — called the "Social Security Statement" or "Benefit Statement" — shows your monthly benefit amount, your payment history, and any changes that have occurred. You can request a replacement statement by mail or view it online through your account. If you notice that your January 2023 payment did not increase by approximately 8.7 percent, contact Social Security to ask why.

Keep in mind that your actual payment may have changed for reasons other than the COLA. If you reported work income, your benefit might have been reduced or suspended under the Earnings Test. If you turned 66 or 67 during 2022, your benefit might have been recalculated. If you had a change in your living situation or family status, your benefit might have been adjusted. The COLA increase is separate from these other adjustments.

Frequently Asked Questions

Did I have to do anything to get the 2023 COLA increase?

No. The Social Security Administration applied the 8.7 percent increase automatically to all beneficiaries on the rolls in December 2022. You did not need to contact Social Security, submit any forms, or take any action. The new amount appeared in your January 2023 payment.

What if I was not receiving SSDI in December 2022?

If your case was closed before December 2022, you did not receive the 2023 COLA increase on that closed case. However, if you were later reinstated or returned to the rolls, your benefit would be calculated using the 2023 rates. If you believe you should have been on the rolls in December 2022, contact Social Security to discuss your situation.

Does the COLA increase affect Medicare or Medicaid?

The COLA does not directly change your Medicare premiums or Medicaid coverage. However, because your SSDI benefit increased, your income for purposes of Medicaid or other means-tested programs may have changed. Some states use SSDI benefit amount to determine Medicaid may be able to access, so a higher benefit could affect your coverage. Contact your state Medicaid office if you have questions.

Will the 2023 COLA affect how much I can earn without losing benefits?

Yes. The Substantial Gainful Activity (SGA) limit for 2023 is $1,470 per month, up from $1,350 in 2022. If you earn more than this amount on average, Social Security may determine that you are working at a level that demonstrates you are no longer disabled. Other work incentive thresholds, like the Student Earned Income Exclusion, also increased.

Can I appeal if I think my 2023 COLA was calculated incorrectly?

The COLA is set by law and applied uniformly to all beneficiaries. You cannot appeal the COLA percentage itself. However, if you believe your individual benefit amount is wrong — for example, if your payment did not increase by 8.7 percent or if you were not included in the increase — you can contact Social Security to request a review of your account.