What the 2023 COLA increase meant for SSDI recipients

In October 2022, the Social Security Administration announced an 8.7% cost-of-living adjustment (COLA) for 2023 — the largest increase in four decades. This meant that starting with the January 2023 payment, SSDI recipients received a higher monthly benefit amount. The exact dollar increase depended on what you were receiving in December 2022; someone getting $1,200 per month would have seen roughly $104 added to their check, while someone receiving $800 would have gained about $70.

The 2023 COLA was a response to inflation that had pushed prices up across housing, food, utilities, and medical care throughout 2022. Social Security calculates COLA each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), measured from the third quarter of the previous year. Because inflation was exceptionally high in mid-2022, the 2023 adjustment was correspondingly large.

Key Takeaways

  • The 2023 COLA of 8.7% increased every SSDI recipient's monthly payment starting in January 2023, with the dollar amount depending on what you were receiving in December 2022.
  • SSDI recipients did not have to do anything to receive the increase — it was applied automatically to existing cases.
  • The increase affected not only your own SSDI payment but also any family benefits paid to your spouse or children on your record.
  • COLA increases can affect your earnings limit if you are working while receiving SSDI, because the limit is adjusted each year based partly on wage growth tied to inflation.

How the 8.7% increase was calculated and applied

Social Security does not send out individual notices for COLA increases. Instead, the agency calculates your new benefit amount by taking your December 2022 payment and multiplying it by 1.087. The new amount appears in your January 2023 payment without any action required on your part.

If you receive SSDI through direct deposit, the increased amount hit your bank account on the third day of January 2023 (or the next business day if January 3 fell on a weekend). If you receive a paper check, it arrived in the mail during the first week of January. The Social Security Administration mailed notices in December 2022 showing the new amount, though many recipients did not receive these notices until after the first payment had already been deposited.

The increase applied to your primary insurance amount (PIA) — the base number Social Security uses to calculate all payments on your record. This means that if your spouse or children also receive benefits based on your work history, their payments increased by the same percentage.

Who received the 2023 COLA increase

Every person receiving SSDI in January 2023 received the 8.7% increase, with one exception: beneficiaries who had not yet reached full retirement age and were earning above the annual earnings limit did not receive a COLA increase that month. Instead, Social Security withheld their benefit because of work earnings, and they received the increase in a later month when they fell back below the limit or reached full retirement age.

If you were a working beneficiary under full retirement age, you would have seen the increase applied retroactively once you stopped working or turned full retirement age. The increase was not lost; it was straightforward delayed.

Family members receiving benefits on your record — a spouse at any age, a spouse caring for a child under 16, or unmarried children under 19 (or 22 if in high school) — all received the same 8.7% increase on their individual benefit amounts.

The 2023 earnings limit and how COLA affected it

In 2023, the annual earnings limit for SSDI beneficiaries under full retirement age was $22,560. This limit is adjusted each year, and the adjustment is tied to changes in national average wages rather than directly to COLA. However, because wage growth and inflation often move together, COLA years typically bring higher earnings limits.

The 2022 limit had been $21,480, so the 2023 limit represented a $1,080 increase. If you were working while receiving SSDI, you needed to track your earnings against this new threshold. Earnings above the limit triggered a $1-for-$2 withholding: Social Security withheld $1 of your benefit for every $2 you earned over the limit.

The earnings limit for the year you reach full retirement age is different and higher. In 2023, it was $60,120 for months before the month you turn full retirement age, with a $1-for-$3 withholding rate.

What happened to your Medicare coverage during the COLA increase

The 2023 COLA increase did not change your Medicare coverage or your may be able to access for it. If you were receiving Medicare as an SSDI beneficiary, you continued to receive it regardless of the higher payment amount. Your Part B premium (the monthly charge for doctor visits and outpatient care) was deducted from your SSDI payment, just as it had been before.

In 2023, the standard Part B premium was $164.90 per month, though some beneficiaries paid less if they had been paying a higher premium in 2022 and were protected by a "hold harmless" provision. This provision prevented your net SSDI payment from dropping below what you received in December 2022, even if your Part B premium increased. Because the 8.7% COLA increase was substantial, most beneficiaries saw a net gain even after the Part B premium was deducted.

Supplemental Security Income (SSI) and the 2023 COLA

If you were receiving Supplemental Security Income (SSI) instead of SSDI, or in addition to SSDI, the 2023 COLA also increased your SSI payment by 8.7%. The federal benefit rate for SSI in 2023 was $914 per month for an individual and $1,371 for a couple, up from $841 and $1,261 in 2022.

SSI is a needs-based program, so the COLA increase could have affected your case if you were close to the income or resource limits. However, Social Security automatically adjusted those limits upward as well, so most recipients did not lose SSI coverage due to the COLA increase alone.

State supplements to SSI also increased in 2023, though the amount varied by state. If you lived in a state that provided a supplement, you would have received the increase from your state as well as the federal increase.

How to verify your 2023 COLA payment amount

You can check your current SSDI payment amount by logging into your my Social Security account at ssa.gov. Click "Benefit Verification" and look for your current monthly benefit. This amount should reflect the 8.7% increase applied in January 2023.

If you did not receive the increase, or if your payment amount looks incorrect, contact Social Security directly. You can call 1-800-772-1213 (TTY 1-800-325-0778) Monday through Friday, 7 a.m. to 7 p.m. Eastern time. Have your Social Security number and recent payment stubs ready when you call.

If you received a notice in December 2022 showing your new 2023 amount, keep that notice for your records. It serves as proof of what Social Security calculated for you that year.

Frequently Asked Questions

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

No. The increase was applied automatically to all SSDI cases in January 2023. You did not need to contact Social Security, fill out any forms, or take any action. If you were working and your earnings were above the limit, the increase was delayed but not lost.

What if I was working in 2023 and my earnings were too high?

Your SSDI payment was withheld due to work earnings, not because you were ineligible for the COLA increase. Once your earnings fell below the annual limit or you reached full retirement age, the increase was applied retroactively. You received the full 8.7% increase eventually.

Does the COLA increase affect my Medicaid or Medicare?

The increase does not change your Medicaid or Medicare coverage. Your Part B premium was deducted from your payment as usual. In most cases, the 8.7% increase was large enough that you saw a net gain even after the premium was taken out.

Will I get a COLA increase in 2024?

Yes, but the percentage will be different. Social Security announces the new COLA in October of each year, based on inflation data from the prior summer. The 2024 COLA was 3.2%, much lower than 2023 because inflation had cooled.

What if my payment amount seems wrong after the increase?

Log into your my Social Security account to verify the amount, or call 1-800-772-1213 to speak with a representative. Have your December 2022 payment amount and your January 2023 amount ready so they can check the calculation.