What the 2023 COLA meant for SSDI payments

In October 2022, the Social Security Administration announced an 8.7 percent cost of living adjustment (COLA) for 2023—the largest increase in four decades. For SSDI recipients, this meant their monthly benefit amount rose by 8.7 percent starting in January 2023. A person receiving $1,000 per month in 2022 would receive $1,087 in 2023; someone on $1,500 would jump to $1,630.50.

The 8.7 percent figure was driven by inflation measured through September 2022. Social Security calculates COLA each year using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When that index rises from the third quarter of one year to the third quarter of the next, Social Security multiplies your current benefit by that percentage and rounds down to the nearest dime.

This increase affected all SSDI beneficiaries—both those who had been on the program for decades and those newly approved in 2023. It also affected Supplemental Security Income (SSI) recipients and Social Security retirees. The raise was automatic; you did not need to contact Social Security or take any action to receive it.

Key Takeaways

  • The 2023 COLA of 8.7 percent was the largest annual increase since 1981, reflecting inflation through September 2022.
  • Your new 2023 benefit amount appeared on your January Social Security statement or in your online account; no action was required.
  • The increase applied to your primary benefit amount, which then affected any family members receiving benefits on your record.
  • Higher SSDI payments in 2023 also raised the earnings limit for Substantial Gainful Activity (SGA), which determines whether work affects your benefits.

How the 8.7 percent increase changed your benefit amount

Social Security rounds the COLA calculation down to the nearest dime. If your benefit was $1,247.30 in December 2022, the 8.7 percent increase would be $108.52, making your new amount $1,355.82. Social Security would round that to $1,355.80. The rounding is always downward, so you never receive more than the calculated amount.

Your new benefit amount became effective on your first payment in January 2023. If you receive payments by direct deposit, the new amount appeared in your account on the third day of the month (or the next business day). If you receive a check, it arrived according to your payment schedule—usually the second, third, or fourth Wednesday of the month, depending on your birth date.

You could view your new benefit amount by logging into your my Social Security account online or by calling Social Security at 1-800-772-1213. Your official benefit verification letter, which you may need for housing, Medicaid, or other programs, also reflected the new amount.

Impact on family members and representative payees

If you are the wage earner on an SSDI record, family members receiving benefits based on your work history also received the 8.7 percent increase. This includes your spouse, ex-spouse, and children under 19 (or 19 if still in high school). Each family member's benefit rose by the same percentage as yours.

If you receive benefits through a representative payee—someone appointed to manage your payments because of a medical or legal condition—the payee received your new benefit amount on your behalf. The payee's role and responsibilities did not change; they continued to manage the funds according to Social Security rules.

If you are a representative payee managing someone else's SSDI, you would have seen their new benefit amount in January 2023. Social Security sends payee notices to the address on file, so check your mail or your online account for confirmation of the new amount.

How the 2023 COLA affected the Substantial Gainful Activity (SGA) limit

The SGA limit is the amount of monthly earnings above which Social Security considers you to be working at a substantial level. If you earn more than the SGA limit, Social Security may find that you are no longer disabled and can stop your benefits. In 2023, the SGA limit was $1,470 per month for non-blind workers and $3,822 per month for blind workers.

These limits rose from $1,350 and $3,570 in 2022, a direct result of the 8.7 percent COLA. The increase meant that you could earn more without triggering a medical review. However, the SGA limit applies only to work you do after your trial work period ends. During the trial work period, you can earn any amount without affecting your benefits.

If you were working and earning close to the 2022 SGA limit of $1,350, the higher 2023 limit gave you more room to increase your hours or wages without risking your benefits. Many SSDI recipients use work incentives like the Plan to Achieve Self-Support (PASS) or Impairment Related Work Expenses (IRWE) to reduce countable earnings further.

How COLA affects Medicare and Medicaid coverage

The 2023 COLA did not change your Medicare coverage. If you were receiving Medicare Part A (hospital insurance) and Part B (medical insurance) as an SSDI beneficiary, your coverage remained the same. Your Part B premium was deducted from your SSDI benefit, and the premium amount for 2023 was set separately from the COLA.

Medicaid coverage varies by state. Some states use your SSDI benefit amount to determine Medicaid income limits. A higher SSDI payment could theoretically push you over an income limit in a state with strict thresholds, but this is rare. Most states that cover SSDI recipients use the federal benefit rate as their threshold, which also increased with the COLA. Contact your state Medicaid office if you are concerned about how the increase affected your coverage.

If you receive both SSDI and SSI, the 2023 COLA raised your SSI federal benefit rate as well. SSI has its own income and resource limits, and the increase could have affected your SSI payment if you also receive other income. Review your SSI notice from January 2023 to understand how the COLA changed your specific situation.

Why the 2023 COLA was unusually large

The 8.7 percent increase reflected inflation that peaked in mid-2022. Prices for food, energy, housing, and transportation all rose sharply in the months leading up to the September 2022 measurement period used for the 2023 COLA calculation. The CPI-W, which measures price changes for urban wage earners, captured these increases.

The previous year's COLA for 2022 was 5.9 percent, already the largest in nearly four decades. The 2023 COLA of 8.7 percent was even larger because inflation continued to accelerate through the summer of 2022. By comparison, COLAs from 2009 to 2020 ranged from zero to 2.8 percent, so the 2023 increase was historically unusual.

Social Security does not predict future COLAs or adjust them based on forecasts. The COLA is calculated mechanically each year using the CPI-W data available in September. This means the 2024 COLA, announced in October 2023, reflected inflation through September 2023, which had moderated from the 2022 peak.

What to do if your 2023 benefit amount seemed wrong

If your January 2023 benefit did not increase by approximately 8.7 percent, or if the amount seemed incorrect, contact Social Security to verify. Log into your my Social Security account and check your benefit verification letter, which shows your current monthly amount. Compare it to your December 2022 statement to confirm the increase was applied.

If the increase was not applied or appears incorrect, call Social Security at 1-800-772-1213 during business hours (Monday through Friday, 7 a.m. to 7 p.m. your local time). Have your Social Security number and recent benefit statement ready. Social Security can explain any discrepancy and correct errors if they occurred.

Errors are uncommon, but they can happen if your record contains a work report, a change in family composition, or a previous overpayment that Social Security is withholding from. Social Security will explain the reason for any reduction or delay in your COLA increase.

Frequently Asked Questions

Did the 2023 COLA increase affect my Medicare Part B premium?

No. Your Medicare Part B premium for 2023 was set separately and deducted from your SSDI benefit. The premium amount is determined by Medicare, not by Social Security. However, the COLA did increase your gross benefit amount before the premium was deducted, so your net payment may have risen even if the premium also increased.

If I was approved for SSDI in 2023, did I get the full 8.7 percent increase?

Your initial benefit amount was calculated based on your earnings record and the rules in effect when you were approved. The 8.7 percent COLA applies to all beneficiaries, including those newly approved. Your first payment reflected the current benefit formula and the 2023 COLA.

Does the higher SGA limit mean I can work more without losing my benefits?

The higher SGA limit means you can earn more before Social Security considers your work substantial. However, you still have a trial work period during which you can earn any amount without affecting benefits. After the trial work period, earnings above the SGA limit can trigger a medical review. Work incentives like PASS and IRWE can help you earn more while keeping your benefits.

What if my state reduced my Medicaid because my SSDI increased?

Contact your state Medicaid office when ready. Most states protect SSDI recipients from losing Medicaid due to a COLA increase, but rules vary. If you lost coverage, ask whether you may have access to for a Medicaid spend-down or a work incentive program that shields income from the Medicaid limit.

Will the 2024 COLA be as large as 2023?

No. The 2024 COLA was 3.2 percent, announced in October 2023. COLAs change each year based on inflation measured through September. The 2024 COLA was smaller because inflation moderated from the 2022 peak. Future COLAs will depend on inflation in the months ahead.