Yes, SSDI recipients received the 2023 COLA increase

Social Security Disability Insurance (SSDI) beneficiaries received an 8.7% cost of living adjustment (COLA) in 2023. This was the largest increase in four decades. The adjustment took effect on January 1, 2023, and appeared in the first payment of that month.

The 8.7% figure was calculated by the Social Security Administration using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2021 through the third quarter of 2022. When inflation rises, the COLA rises with it. When inflation falls or stays flat, the COLA can be zero or very small.

If you were receiving SSDI on January 1, 2023, you automatically received this increase. You did not have to do anything to claim it. Social Security sent a COLA notice in December 2022 showing the new payment amount.

Key Takeaways

  • The 2023 COLA of 8.7% was applied automatically to all SSDI payments starting January 1, 2023, with no action required from beneficiaries.
  • COLA is calculated each year using inflation data from the Consumer Price Index and affects both SSDI and retirement benefits equally.
  • Your new payment amount was shown in a notice Social Security mailed in December 2022 before the increase took effect.
  • COLA increases affect your Medicare premiums, Supplemental Security Income (SSI) payments, and work incentive thresholds in the same year.

How the 2023 COLA was calculated

Social Security calculates COLA by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July, August, and September of one year to the same three months of the previous year. For 2023, Social Security compared the third quarter of 2022 to the third quarter of 2021. The percentage increase between those two periods becomes the COLA.

In 2022, inflation was high across the economy. The CPI-W rose 8.7% year-over-year during that measurement window, so the 2023 COLA was 8.7%. This was the largest COLA since 1981. For comparison, the 2022 COLA was 5.9%, and the 2021 COLA was 1.3%.

The COLA is the same for all SSDI beneficiaries. A person receiving $1,200 per month gets an 8.7% increase ($104.40), and a person receiving $2,000 per month gets the same 8.7% increase ($174). The percentage is uniform, but the dollar amount depends on what you were receiving before the adjustment.

What changed in your payment and other benefits

Your monthly SSDI payment increased by 8.7% starting in January 2023. If you were also receiving Supplemental Security Income (SSI), that payment increased by the same percentage. If you were on Medicare, your Part B premium (for doctor visits and outpatient care) also changed, though the direction and amount depended on your income and whether you were subject to Income-Related Monthly Adjustment Amounts (IRMAA).

The 2023 COLA also raised the Substantial Gainful Activity (SGA) threshold, which is the income limit that determines whether you are working too much to keep your SSDI benefits. For 2023, the SGA threshold was $1,470 per month for non-blind beneficiaries and $3,822 per month for blind beneficiaries. If you were working and earning close to these limits, the higher threshold gave you more room to work without risking your benefits.

Trial Work Period (TWP) earnings and Plan to Achieve Self-Support (PASS) thresholds also increased with the 2023 COLA. These are work incentive programs that let you test your ability to work or save money for a work goal without when ready losing benefits. The higher thresholds reflected the increased cost of living.

When you received the increase and how to verify it

The 2023 COLA took effect on January 1, 2023. Your January 2023 payment reflected the new amount. Social Security mailed a notice in December 2022 titled "Your Social Security Benefit Statement" or "Your Supplemental Security Income (SSI) Payment Statement" showing your old payment amount and your new payment amount after the COLA.

If you did not receive a notice, or if you want to confirm your current payment amount, you can log into your Social Security account at ssa.gov or call Social Security at 1-800-772-1213. You can also visit your local Social Security office in person. Your payment stub or bank deposit record will also show the new amount.

Some beneficiaries receive SSDI through a representative payee—someone appointed to manage the money on their behalf. The representative payee receives the notice, but the beneficiary should ask to see it or ask the payee to explain the change.

How COLA affects your taxes and work incentives

The 2023 COLA increase may have affected your federal income tax situation. SSDI itself is not taxable, but if you have other income (wages, interest, pensions), the combination of SSDI and other income can trigger tax liability. The income thresholds for taxing Social Security benefits did not change in 2023, so a higher SSDI payment could push you closer to or over the threshold where benefits become taxable.

If you are using a work incentive like PASS or Impairment Related Work Expenses (IRWE), the 2023 COLA may have changed how much you can earn or set aside. PASS allows you to set aside income and resources to reach a work goal; the income limit for PASS increased with the COLA. IRWE lets you deduct certain disability-related work expenses from your earnings; the types of expenses covered did not change, but the overall earnings calculation may have shifted.

If you are in a Trial Work Period, the monthly earnings threshold for counting a month as a work month increased to $1,050 in 2023 (this threshold changes annually). Months where you earn less than this amount do not count against your nine-month TWP, even though you are working.

COLA for future years and how it is announced

COLA is recalculated every year using the same method. There is no COLA in years when inflation is flat or negative. The most recent COLA before 2023 was 5.9% in 2022. Before that, 2021 had a 1.3% COLA, and 2020 had a 1.6% COLA. In 2009 and 2010, there was no COLA because inflation was zero or negative.

Social Security announces the COLA for the following year in October. For example, the 2024 COLA was announced in October 2023. The announcement is posted on ssa.gov and is also sent to beneficiaries by mail in December of the year before it takes effect.

You can check the Social Security website or call 1-800-772-1213 in October of any year to learn the COLA for the next year. This information is also published in news releases and is widely covered by media outlets.

Frequently Asked Questions

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

No. The COLA was applied automatically to your SSDI payment on January 1, 2023. You did not have to contact Social Security, fill out a form, or take any action. If you were receiving SSDI on that date, you received the increase.

What if I started receiving SSDI after January 1, 2023?

Your first payment would already include the 2023 COLA. Social Security calculates your benefit amount using the current benefit formula, which reflects the COLA that has already taken effect. You do not receive a separate increase later.

Does COLA affect my Medicare premiums?

Yes. Your Medicare Part B premium may have changed in 2023. However, Social Security has a "hold harmless" rule that prevents your Part B premium from rising faster than your COLA increase. If your Part B premium would have increased more than your COLA, Social Security holds your premium at the previous year's level. This rule does not explore to Part D (prescription drug) premiums.

Can I appeal or dispute the COLA amount?

No. COLA is a formula set by law and applied uniformly to all beneficiaries. It is not subject to individual appeals or adjustments. If you believe your payment amount is wrong for a different reason—such as an error in your work history or a change in your case—you can contact Social Security to request a review.

Will there be a COLA in 2024?

Yes. Social Security announced a 3.2% COLA for 2024, which took effect on January 1, 2024. The COLA for each year depends on inflation during the measurement period (July through September of the previous year), so it changes year to year.