What the 2023 COLA increase was and who received it

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 in January 2023, SSDI payments rose by 8.7% across the board. If you were receiving SSDI in December 2022, your January 2023 payment was automatically 8.7% higher, with no action required on your part.

The 2023 COLA applied to all SSDI beneficiaries: workers with disabilities, adult children of disabled or deceased workers, and spouses of disabled workers. It also applied to Supplemental Security Income (SSI) recipients. The increase was tied to inflation measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2021 to the third quarter of 2022.

Not everyone saw the same dollar amount increase. Because COLA is a percentage, people receiving higher payments got larger dollar increases than those receiving lower payments. For example, a person receiving $1,200 per month saw an increase of about $104, while someone receiving $800 per month saw an increase of about $70.

Key Takeaways

  • The 2023 COLA of 8.7% was automatically applied to all SSDI payments starting in January 2023, with no process or request needed.
  • The increase was the largest in four decades and reflected inflation measured between mid-2021 and mid-2022.
  • Your new payment amount appeared on your January 2023 benefit statement; you did not receive a separate notice of the increase.
  • The 2023 COLA affected your Medicare premiums, Medicaid coverage, and any means-tested benefits you received, so your total benefit picture may have changed.

How the 2023 increase affected your monthly payment

Your January 2023 SSDI payment was calculated by taking your December 2022 payment amount and multiplying it by 1.087. The Social Security Administration did not send a separate letter announcing the increase for most beneficiaries — the new amount straightforward appeared in your bank account or on your benefit statement.

If you received a paper check, the amount on your January check reflected the increase. If you received direct deposit, the larger amount went into your account on the same day of the month you normally received payment. You could verify the new amount by logging into your my Social Security account online, calling 1-800-772-1213, or checking your benefit statement.

The increase was permanent going forward. Your new 2023 payment amount became your baseline for future COLA calculations. In 2024 and beyond, any additional COLA would be calculated from this higher amount.

Impact on Medicare premiums and other benefits

The 2023 COLA increase affected more than just your SSDI payment. If you were enrolled in Medicare Part B (medical insurance) or Part D (prescription drug coverage), your premiums were tied to your SSDI payment amount. When your SSDI payment rose, your Medicare premiums could change as well.

For 2023, the Medicare Part B standard premium was $164.90 per month — higher than 2022 — but the "hold harmless" rule protected most SSDI beneficiaries. This rule meant that your SSDI payment could not decrease because of a Medicare premium increase. If your SSDI payment rose by 8.7%, your Medicare premium increase was limited to the amount of your COLA increase, so you kept most of the benefit boost.

If you received Medicaid or other means-tested benefits based on income, the COLA increase could have affected your coverage. Some states use SSDI payment amounts to determine Medicaid may be able to access. A higher SSDI payment might have pushed you over an income limit in your state, though many states have protections that prevent COLA increases alone from causing loss of coverage.

When you would have received notice of the 2023 COLA

The Social Security Administration announced the 2023 COLA on October 13, 2022 — more than two months before the increase took effect. This gave beneficiaries, advocates, and state agencies time to plan for the change.

You did not receive an individual notice in the mail for the COLA itself. Instead, your benefit statement (which you can view online through my Social Security or request by mail) showed your new payment amount starting in January 2023. If you called Social Security or visited a field office, staff could tell you the new amount, but the agency did not mail letters to every beneficiary announcing the increase.

If you were due to receive a notice about something else — such as a change in your Medicare premium or a Medicaid information — that notice would have reflected the COLA increase in your income calculation.

How COLA is calculated and why 2023 was unusually high

COLA is calculated once per year, in October, based on inflation data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration compares the average CPI-W for July, August, and September of the current year to the average for the same three months of the previous year. If inflation has occurred, beneficiaries receive a COLA increase in January.

The 2023 COLA of 8.7% was unusually large because inflation was unusually high in 2022. Prices for food, energy, housing, and other goods and services rose sharply between mid-2021 and mid-2022, and the CPI-W reflected those increases. The 8.7% figure was the highest COLA since 1981.

COLA is not may provide every year. If the CPI-W shows no inflation or deflation (falling prices), beneficiaries receive no increase. This last happened in 2010 and 2011, when SSDI payments remained flat. The 2023 increase was a response to real inflation that affected the cost of living for people on fixed incomes.

What happened if you were working or had other income in 2023

The 2023 COLA increase applied to your SSDI payment regardless of whether you were working. If you were in a trial work period or using the Plan to Achieve Self-Support (PASS), your SSDI payment still increased by 8.7%. The COLA was not reduced or withheld based on your earnings.

However, if your earnings exceeded the substantial gainful activity (SGA) limit in 2023, your SSDI could have been suspended or terminated for reasons unrelated to the COLA increase. The SGA limit for 2023 was $1,470 per month for non-blind workers. The COLA increase did not change the SGA limit or the rules about how much you could earn while receiving SSDI.

If you received other income — such as pension payments, rental income, or unemployment benefits — the COLA increase to your SSDI payment did not affect those other income sources. However, if you received SSI in addition to SSDI, the SSI payment also increased by 8.7%, and your total monthly income rose accordingly.

Frequently Asked Questions

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

No. The increase was automatic and applied to all SSDI beneficiaries in January 2023. You did not need to contact Social Security, submit any forms, or take any action. If you were receiving SSDI in December 2022, the 8.7% increase was added to your January 2023 payment.

What if I didn't see the increase in my payment?

Check your benefit statement online through my Social Security or contact Social Security at 1-800-772-1213 to verify your payment amount. If you were receiving SSDI in December 2022 and did not see an 8.7% increase in January 2023, contact your local Social Security office to report the discrepancy. Errors are rare but do occur.

Will I receive a COLA increase in 2024?

COLA for 2024 depends on inflation data from mid-2023. The Social Security Administration announces the 2024 COLA in October 2023. If inflation continues, you will receive an increase in January 2024; if inflation has slowed or reversed, the increase may be smaller or zero. You can check the Social Security website in October for the announced figure.

How did the 2023 COLA affect my taxes?

SSDI itself is not taxable income, so the COLA increase did not create a tax liability. However, if you had other income that, combined with your SSDI, exceeded certain thresholds, part of your SSDI could have been subject to federal income tax. The COLA increase may have pushed you closer to those thresholds if you were already near them.

Can I appeal or request a different COLA amount?

No. COLA is set by law and applied uniformly to all beneficiaries. You cannot request a higher or lower increase, and there is no appeal process for the COLA amount itself. If you believe your payment amount is incorrect for a different reason, you can contact Social Security to request a review.