SSDI recipients received a 8.7% cost-of-living adjustment (COLA) in 2023

Yes, SSDI recipients got a COLA in 2023. The Social Security Administration announced an 8.7% increase, effective January 2023. This was the largest COLA since 1981. If you were receiving SSDI in December 2022, your January 2023 payment was 8.7% higher than your December payment.

The 8.7% figure applies to all SSDI beneficiaries the same way—there is no variation by age, state, or how long you have been on the program. Your new payment amount was calculated by taking your December 2022 benefit and multiplying it by 1.087. For example, if you received $1,200 in December 2022, your January 2023 payment was $1,304.40.

This increase also affected your Medicare premiums. The standard Part B premium for 2023 was $164.90 per month, down from $170.10 in 2022. Because of a rule called "hold harmless," your SSDI payment could not go down even if your Part B premium rose—but if the premium fell, you kept the savings.

Key Takeaways

  • The 2023 COLA of 8.7% applied automatically to all SSDI beneficiaries with no action required on your part.
  • Your new benefit amount took effect in January 2023 and was based on your December 2022 payment multiplied by 1.087.
  • 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.
  • Medicare Part B premiums fell in 2023, so most SSDI recipients saw their net payment increase even after Medicare deductions.

How the 2023 COLA was calculated

The 8.7% COLA was not chosen by the Social Security Administration. It is set by law based on the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of one year to the third quarter of the next. For 2023, Social Security compared the CPI-W from July through September 2021 to the CPI-W from July through September 2022. The inflation measured in that period was 8.7%.

This means the COLA reflects what happened to prices in the past, not what is expected to happen in the future. The 2023 COLA was announced in October 2022, based on data that was already months old. By the time the increase took effect in January 2023, inflation had already begun to slow.

The CPI-W is a specific measure of inflation that tracks prices paid by urban wage earners and clerical workers. It is not the same as the Consumer Price Index for All Urban Consumers (CPI-U), which is more commonly cited in news reports. Social Security uses the CPI-W by law, even though it sometimes differs from the broader CPI-U.

What changed in your SSDI payment

If you were on SSDI in December 2022, you saw your benefit increase in January 2023. The amount of the increase depended on what you were receiving before. Someone receiving $800 per month got an increase of $69.60. Someone receiving $1,500 per month got an increase of $130.50. The percentage was the same for everyone, but the dollar amount varied based on your prior benefit.

You did not have to do anything to receive the increase. Social Security applied it automatically. You should have seen the higher amount in your bank account or check in January 2023. If you did not, you could contact Social Security to report the problem.

If you started SSDI after December 2022, your initial benefit amount already included the 8.7% increase. You did not receive a separate COLA notice because you were not yet a beneficiary when the increase was announced.

How the COLA affected your Medicare costs

The 2023 COLA increased your SSDI payment, but your Medicare Part B premium actually fell. The standard Part B premium dropped from $170.10 in 2022 to $164.90 in 2023—a savings of $5.20 per month. This meant that most SSDI recipients who pay for Part B out of their benefit saw a net gain larger than the 8.7% increase alone.

The Part B premium decrease was unusual. Most years, premiums rise. The 2023 decrease happened because of a rule called "hold harmless," which protects Social Security beneficiaries from premium increases. When premiums are projected to rise, the rule limits how much of the increase can be passed to beneficiaries. In 2023, the rule worked in reverse: the premium fell, and beneficiaries kept the savings.

If you are on both SSDI and Medicare, your Part B premium is deducted from your SSDI payment before you receive it. The combination of a higher SSDI payment and a lower Part B premium meant your take-home amount increased by more than 8.7% in 2023.

SSDI and Medicaid after the 2023 COLA

The 2023 COLA did not automatically change your Medicaid status. Medicaid rules vary by state, and some states use the SSDI payment amount to determine whether you remain on Medicaid. In states that use "SSI-related" Medicaid, a higher SSDI payment could theoretically push your income above the state limit and end your coverage—but this is rare because most states set their limits high enough to protect beneficiaries who receive a COLA.

If you are on Medicaid and concerned that the COLA increase might affect your coverage, contact your state Medicaid office. They can tell you whether the increase changes anything for you. In most cases, it does not.

Some states offer "Medicaid buy-in" programs that let you stay on Medicaid even if your SSDI payment exceeds the usual limit. These programs are designed specifically to protect people who receive COLA increases or other changes in income. If you lost Medicaid because of the COLA, ask your state Medicaid office whether a buy-in program is available.

Work incentives and the 2023 COLA

If you are working while on SSDI, the 2023 COLA affected your substantial gainful activity (SGA) threshold. The SGA threshold is the amount of monthly earnings that Social Security uses to decide whether you are working at a level that would end your benefits. In 2023, the SGA threshold for non-blind beneficiaries was $1,470 per month (it was $1,550 for blind beneficiaries). These thresholds are adjusted each year based on the national average wage index, not the COLA, so the COLA did not directly change them.

However, the higher SSDI payment you received in 2023 may have affected your taxes if you are working. SSDI itself is not taxable, but if your combined income (SSDI plus earnings plus other income) exceeds certain thresholds, you may owe federal income tax. The COLA increase could push you over those thresholds depending on your other income.

Work incentive programs like Impairment Related Work Expenses (IRWE) and Plans to Achieve Self-Support (PASS) were not changed by the COLA. These programs let you set aside income or expenses to keep more of your earnings without losing benefits. If you are using either program, the COLA did not affect how they work.

Frequently Asked Questions

Did everyone on SSDI get the same 8.7% increase in 2023?

Yes, all SSDI beneficiaries received the same 8.7% COLA in 2023. The percentage was identical for everyone. The dollar amount of the increase varied depending on what you were receiving before, but the percentage was the same.

What if I started SSDI in 2023 after January?

Your initial benefit amount already included the 8.7% COLA. You did not receive a separate increase notice because you were not yet a beneficiary when the COLA was announced. Your first payment reflected the 2023 benefit level.

Can the COLA increase cause me to lose Medicaid?

It is unlikely. Most states set their Medicaid income limits high enough that a COLA increase does not affect coverage. If you are concerned, contact your state Medicaid office. Some states offer Medicaid buy-in programs that protect you if your income rises.

Does the COLA affect my work incentives or SGA threshold?

The COLA does not change the SGA threshold or how work incentive programs like IRWE and PASS function. However, a higher SSDI payment may affect your federal income tax if you are working and your combined income exceeds tax thresholds.

When will the 2024 COLA be announced?

The COLA for the following year is announced in October of the current year. The 2024 COLA was announced in October 2023 and took effect in January 2024. You can find the current year's COLA on the Social Security Administration website.