What the 2023 COLA increase was
Social Security raised SSDI payments by 8.7 percent in January 2023. This was the largest increase since 1981. The raise applied to everyone receiving SSDI — no action was required on your part.
The 8.7 percent figure came from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), measured from the third quarter of 2021 to the third quarter of 2022. Social Security calculates COLA each October using that specific index, and the new payment amount takes effect the following January.
If you were receiving $1,000 per month in December 2022, your January 2023 payment became $1,087. The exact dollar increase depended on your individual benefit amount, which varies based on your work history and the age at which you began receiving benefits.
Key Takeaways
- The 2023 COLA raised SSDI payments by 8.7 percent starting in January, with no action needed from you to receive the increase.
- The increase was calculated using inflation data from mid-2021 through mid-2022, which reflected higher prices for food, energy, and housing during that period.
- Your new payment amount appeared automatically in your bank account or on your payment card in January 2023; you did not need to contact Social Security.
- The increase affected your Medicare premiums as well — some beneficiaries saw lower Part B premiums because of how Social Security calculates the "hold harmless" rule.
Why inflation triggered such a large increase
The 2023 COLA was large because inflation was high during the measurement period. The CPI-W rose 8.7 percent year-over-year, driven mainly by increases in energy prices, food costs, and housing expenses. Gasoline, heating oil, and groceries all cost significantly more in fall 2022 than they had in fall 2021.
COLA is not set by Social Security or Congress — it is set by the inflation rate itself. Social Security is required by law to adjust benefits each year based on the CPI-W. When inflation is low, COLA is low or zero. When inflation is high, COLA is high. The 2023 increase reflected the actual cost increases that beneficiaries faced during that period.
This was the first time since 1981 that COLA exceeded 8 percent. The previous largest increase in that 42-year span was 5.8 percent in 2008. Most years saw increases between 1 and 3 percent.
How the increase affected your Medicare costs
The 2023 COLA increase changed what you paid for Medicare Part B (doctor visits and outpatient care). Social Security uses a rule called "hold harmless" that prevents your Part B premium from rising faster than your SSDI payment increase.
Because the 2023 COLA was 8.7 percent, your Part B premium could not rise by more than 8.7 percent. In practice, the Centers for Medicare and Medicaid Services (CMS) announced a Part B premium increase of 8.5 percent for 2023, which stayed within the hold harmless limit. This meant your net increase — the COLA raise minus the premium increase — was positive.
If you were not yet on Medicare, or if you paid your Part B premium directly rather than having it deducted from your SSDI check, the COLA increase did not directly affect your Medicare costs. However, other Medicare premiums (Part D for prescription drugs, and supplemental insurance premiums) are set by private insurers and are not subject to the hold harmless rule.
What happened to your SSI payment if you received it
If you received Supplemental Security Income (SSI) in addition to SSDI, you also received an 8.7 percent increase in your SSI payment in January 2023. SSI uses the same COLA calculation as SSDI.
The federal SSI payment amount in 2022 was $841 per month for an individual. In 2023, it became $913 per month. If your state added a supplement to the federal SSI amount, that supplement was also increased, though the percentage increase varied by state.
SSI is a needs-based program, meaning your income and resources are counted against your payment. The COLA increase did not change the resource limit ($2,000 for an individual) or the income exclusions that allow you to work and keep some of your earnings.
How the 2023 increase compared to previous years
The 2023 COLA of 8.7 percent was exceptional. Here is how recent years compared:
| Year | COLA Percentage |
|---|---|
| 2022 | 5.9% |
| 2021 | 1.3% |
| 2020 | 1.3% |
| 2019 | 2.8% |
| 2018 | 2.0% |
The 2022 COLA of 5.9 percent was itself the largest increase in nearly four decades. The 2023 increase of 8.7 percent exceeded it, reflecting the continued high inflation environment in mid-2022.
For context, the average COLA from 2000 to 2021 was approximately 2.5 percent per year. The back-to-back large increases in 2022 and 2023 were unusual and reflected economic conditions that do not occur every year.
What the 2023 increase meant for your work incentives
If you were working and using a work incentive like the Student Earned Income Exclusion or Plan to Achieve Self-Support (PASS), the 2023 COLA increase affected your benefit calculation but not the rules themselves.
The Substantial Gainful Activity (SGA) threshold — the income level above which Social Security assumes you can work — also increased in 2023. For non-blind beneficiaries, SGA was $1,470 per month in 2023, up from $1,350 in 2022. This meant you could earn more before Social Security considered your work a return to substantial gainful activity.
If you were using Impairment Related Work Expenses (IRWE) or other deductions to reduce your countable earnings, those deductions were still calculated the same way. The COLA increase did not change how work incentives function, only the dollar thresholds at which they explore.
Frequently Asked Questions
Did I have to do anything to get the 2023 COLA increase?
No. The increase was automatic. Social Security deposited the new amount into your bank account or payment card in January 2023 without any action on your part. If you did not see the increase, contact Social Security to report the issue.
Why was the 2023 COLA so much larger than usual?
Inflation was high during the measurement period (mid-2021 to mid-2022). Energy, food, and housing costs all rose sharply. COLA is set by law to match the inflation rate, so a high inflation rate produces a high COLA.
Does the COLA increase count as income for Medicaid or SSI?
No. COLA increases are not counted as new income. Your Medicaid coverage and SSI payment are based on your total SSDI amount, which already includes the COLA. The increase does not trigger a redetermination of your Medicaid or SSI status.
If I was working, did the 2023 COLA affect my benefits?
The COLA increased your benefit amount, which affects how much you can earn before your benefits are reduced. The SGA threshold also increased to $1,470 per month. Your work incentives (IRWE, PASS, Student Earned Income Exclusion) still work the same way, but the dollar limits changed.
What if I missed the January 2023 payment or did not receive it?
Contact Social Security when ready. Call 1-800-772-1213 (TTY 1-800-325-0778) or visit your local Social Security office. Bring your Social Security card and a form of identification. Social Security can investigate whether the payment was deposited and help you recover it if there was an error.