The 2023 SSDI payment increase was 8.7 percent

In October 2022, the Social Security Administration announced that SSDI payments would rise by 8.7 percent starting in January 2023. This was the largest increase in four decades. The increase applied to all SSDI beneficiaries — there was no separate process or action required to receive it.

The 8.7 percent figure came from the Cost of Living Adjustment (COLA), which is calculated each year based on inflation data from the Consumer Price Index. Because inflation was unusually high in 2022, the COLA for 2023 was correspondingly large. The exact dollar amount of your increase depended on what you were receiving in December 2022.

If you received $1,000 per month in December 2022, your January 2023 payment became $1,087. If you received $1,500, it became $1,630.50. The increase was automatic — Social Security sent updated payment notices to all beneficiaries in December 2022 showing the new amount.

Key Takeaways

  • The 2023 COLA increased SSDI payments by 8.7 percent for all beneficiaries, with the new amount taking effect in January 2023.
  • Your specific dollar increase depended on your December 2022 payment amount, calculated by multiplying that amount by 1.087.
  • The increase was automatic — you did not need to contact Social Security or take any action to receive it.
  • The 8.7 percent figure was based on inflation data from the third quarter of 2022, which was the highest inflation period in four decades.
  • If you did not receive a notice in December 2022, you could check your updated payment amount by logging into your my Social Security account online.

How the 2023 increase compared to previous years

The 8.7 percent increase was substantially larger than the adjustments of the previous decade. From 2009 to 2021, annual COLAs ranged from 0 percent (in 2010, 2011, and 2016) to 2.8 percent (in 2018). Most years fell between 1 and 2 percent. The 2022 COLA was 5.9 percent, which was already notably high. The 2023 figure of 8.7 percent exceeded even that.

The reason for the size of the 2023 increase was the inflation spike that occurred in 2022. Prices for gasoline, food, housing, and other goods and services rose faster than they had in decades. The Consumer Price Index, which measures this inflation, showed increases that directly fed into the COLA calculation. When inflation is high, the COLA is high. When inflation is low or negative, the COLA is low or zero.

What the increase meant for your monthly budget

For someone receiving $1,200 per month in December 2022, the 8.7 percent increase added $104.40 to their monthly payment. For someone receiving $2,000 per month, it added $174. These amounts continued in every payment going forward — the increase was permanent, not a one-time bonus.

However, the increase did not necessarily mean your purchasing power stayed the same. Although inflation was high in 2022, prices continued to rise in 2023 and beyond. The COLA is calculated based on inflation that already happened, not inflation that will happen. This means there is often a lag between when prices rise and when your payment adjusts to match.

Additionally, if you were receiving Supplemental Security Income (SSI) in addition to SSDI, or if you had other income that affected your SSI amount, the interaction between programs could affect your total payment. SSI has its own COLA, which was also 8.7 percent in 2023, but SSI has a resource limit and income limit that can change how much you receive.

How COLA is calculated each year

The COLA is not set by Congress or by a Social Security official. Instead, it is calculated automatically using a specific formula based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Social Security looks at the average CPI-W for the third quarter of each year (July, August, and September) and compares it to the average for the third quarter of the previous year.

If the 2023 third-quarter average is higher than the 2022 third-quarter average, the percentage increase becomes the COLA for the following year. In 2022, the third-quarter CPI-W was significantly higher than in 2021, which is why the 2023 COLA was 8.7 percent. The Social Security Administration announces the COLA in October, and it takes effect in January of the following year.

This means the COLA for 2024 was announced in October 2023 and took effect in January 2024. That figure was 3.2 percent — lower than 2023 because inflation had cooled between the third quarter of 2022 and the third quarter of 2023. The COLA for each year depends entirely on what inflation was during that specific measurement period.

Checking your 2023 payment amount

Social Security mailed a notice to every SSDI beneficiary in December 2022 showing the new payment amount effective January 2023. If you did not receive this notice, or if you lost it, you could view your current payment amount by logging into your my Social Security account at ssa.gov. You would need your Social Security number and a password to access the account.

Your payment notice also showed the reason for the change — it stated that the increase was due to the COLA. If your payment amount did not increase, or if it decreased, the notice explained why. This could happen if you had other income that affected your SSDI amount, or if there was an error in your record that Social Security corrected.

If you received SSDI as a family member on someone else's record — for example, as a spouse or child of a worker — your payment also increased by 8.7 percent in January 2023. Family members' payments are tied to the worker's primary insurance amount, which increases with the COLA.

The 2023 increase and your Medicare or Medicaid

If you were receiving Medicare because of your SSDI status, your Medicare Part B premium was deducted from your SSDI payment. In 2023, the standard Part B premium was $164.90 per month, though some beneficiaries paid less if they had been on Medicare for a long time. The 8.7 percent COLA increase was applied to your gross payment before this deduction.

If you were receiving Medicaid, the increase in your SSDI payment did not automatically end your Medicaid coverage. Medicaid rules vary by state, but most states have a process called "Medicaid Continuation" or "Section 1619(b)" that allows SSDI beneficiaries to keep Medicaid even when their SSDI payment rises above the state's income limit. You would need to contact your state Medicaid office to confirm your coverage remained active after the increase.

What to do if you think your 2023 increase was wrong

If your payment did not increase by 8.7 percent, or if you believe the new amount was calculated incorrectly, you could contact Social Security to ask for a review. Call 1-800-772-1213 (TTY 1-800-325-0778) to speak with a representative, or visit your local Social Security office in person. Have your Social Security number and your December 2022 payment amount available when you call.

Social Security could make an error in explore the COLA if your record contained incorrect information, if you had a work incentive or other special circumstance that affected your payment, or if there was a processing mistake. A representative could review your payment history and explain why your amount was what it was. If an error was found, Social Security would correct it and send you back pay for the months you were underpaid.

Frequently Asked Questions

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

Yes, the COLA applied to all SSDI beneficiaries. However, the dollar amount of the increase varied depending on what each person was receiving in December 2022. Someone receiving $500 per month got a smaller dollar increase than someone receiving $2,000 per month, but both received an 8.7 percent increase.

What if I was not on SSDI for the entire year of 2022?

If you started receiving SSDI in 2022, your January 2023 payment still included the 8.7 percent COLA applied to whatever amount you were receiving in December 2022. The COLA applies to all beneficiaries regardless of when they started receiving payments.

Does the 2023 increase affect how much I can earn while working?

No. The amount you can earn without affecting your SSDI payment is set by Social Security's work incentive rules and does not change based on the COLA. In 2023, the Substantial Gainful Activity (SGA) limit was $1,470 per month, but this is separate from your COLA increase.

Will the 2023 increase affect my taxes?

SSDI payments themselves are not taxable income. However, if you have other income, a portion of your SSDI might become taxable under the "combined income" rule. The increase in your SSDI payment could push your combined income higher, potentially making more of your benefits taxable. Consult a tax professional about your specific situation.

What was the COLA for 2024?

The 2024 COLA was 3.2 percent, announced in October 2023 and effective January 2024. This was lower than 2023 because inflation had decreased between the measurement periods. The COLA changes every year based on current inflation data.