The 2023 COLA raised SSDI payments by 8.7 percent

In October 2022, the Social Security Administration announced that Social Security Disability Insurance (SSDI) payments would increase by 8.7 percent starting in January 2023. This was the largest cost-of-living adjustment (COLA) in four decades, driven by inflation that had climbed throughout 2022.

The 8.7 percent figure applied to everyone receiving SSDI—there were no exceptions based on how long you had been receiving benefits or how much you were already getting. If you were receiving $1,200 per month in December 2022, your January 2023 payment would have been approximately $1,304. The exact amount of your raise depended on what you were receiving before the adjustment.

This was not a one-time bonus or a separate payment. The raise became your new regular monthly benefit amount, and it continued for all months after January 2023 unless another COLA was announced for a future year.

Key Takeaways

  • The 2023 COLA of 8.7 percent was the largest increase since 1981, reflecting high inflation in 2022.
  • The raise applied automatically to all SSDI recipients starting in January 2023—you did not need to do anything to receive it.
  • Your new payment amount became your baseline for future years, so any 2024 COLA would be calculated on top of the 2023 amount.
  • The same 8.7 percent increase applied to Supplemental Security Income (SSI) recipients and Social Security retirement beneficiaries.

Why the 2023 increase was so large

The Social Security Administration calculates COLA each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures inflation across the economy. When inflation rises sharply, the COLA rises with it.

Throughout 2022, inflation reached levels not seen since the early 1980s. Prices for groceries, gasoline, housing, and other essentials climbed significantly. The CPI-W reflected these increases, which is why the 2023 COLA was so much larger than the typical adjustment. In many recent years, COLA had been between 1 and 3 percent. The 8.7 percent jump was exceptional.

It is important to understand that COLA is not set by Congress or by any decision-maker at Social Security. It is a formula—the agency calculates it automatically based on the inflation data that exists. This means the size of each year's COLA is determined by economic conditions, not by policy choices.

How the raise appeared in your payment

If you were receiving SSDI in December 2022, you would have seen the new amount in your January 2023 payment. Most SSDI recipients receive payments by direct deposit, so the larger amount would have appeared in your bank account on the usual payment date.

Social Security also mailed a notice to every beneficiary in December 2022 explaining the new payment amount and the COLA percentage. If you did not receive this notice or lost it, you could have called Social Security at 1-800-772-1213 to confirm your new amount.

The raise applied whether you were receiving SSDI as a worker (because of your own disability), as a spouse of a disabled worker, or as a child of a disabled worker. The percentage was the same for everyone.

What happened to other benefits tied to SSDI

If you were receiving both SSDI and Supplemental Security Income (SSI), both payments increased by 8.7 percent. If you were receiving SSDI and Medicare, your Medicare coverage did not change, but your SSDI payment did.

If you were receiving SSDI and had a work incentive plan in place—such as a Plan to Achieve Self-Support (PASS)—the COLA did not affect the plan itself. However, your SSDI payment amount increased, which could have affected how much you could earn while still receiving benefits. If you had questions about how the raise interacted with your specific work plan, Social Security's Work Incentives Planning and information (WIPA) program could have answered them.

The 2023 COLA did not affect everyone the same way

While everyone receiving SSDI got the same 8.7 percent raise, the real impact on your life depended on what you were spending money on. If your costs for food, rent, or medicine had risen faster than 8.7 percent, the raise might not have fully covered the increase. If your costs had risen more slowly, the raise might have given you more purchasing power than before.

Some SSDI recipients also received other income—from work, from a spouse's earnings, or from savings. For these people, the COLA raised their total income, which could have affected their taxes or other benefits. For example, if you were receiving SSDI and had started working, the raise could have pushed your total income higher, which might have affected your Medicare premiums or your tax situation.

The COLA also did not change the rules about how much you could earn while receiving SSDI. In 2023, the Substantial Gainful Activity (SGA) limit—the amount you could earn without risking your benefits—was $1,470 per month. The COLA raised your payment but not this limit.

How future COLAs are calculated

Each year, Social Security announces the next year's COLA in October, based on inflation data from the previous months. The adjustment takes effect in January. This means the 2024 COLA (announced in October 2023) was calculated based on inflation from mid-2022 through mid-2023, and it applied to payments starting in January 2024.

Your 2024 COLA was calculated on top of your 2023 amount. If you were receiving $1,304 in December 2023 (after the 8.7 percent raise), your 2024 COLA would have been a percentage of that $1,304, not of your original pre-2023 amount. This is called compounding, and it means that large COLAs in one year create a larger base for future years.

There is no way to predict what future COLAs will be, because they depend on inflation, which changes. Some years have small COLAs, and some years have large ones. In years when inflation is low or when prices actually fall, COLA can be zero or very small.

Frequently Asked Questions

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

No. The COLA was automatic. If you were receiving SSDI in January 2023, the new amount was applied to your account without any action on your part. You did not need to contact Social Security, fill out a form, or take any steps.

What if I thought my 2023 payment was wrong?

You could have called Social Security at 1-800-772-1213 to ask them to review your payment. Have your Social Security number ready and ask them to explain how your new amount was calculated. They can tell you what you were receiving in December 2022 and confirm that 8.7 percent was added correctly.

Did the 2023 raise affect my Medicare premiums?

For most SSDI recipients, Medicare premiums are deducted from your SSDI payment, so a higher payment meant a higher deduction. However, Social Security has rules that protect beneficiaries from large premium increases in a single year. If your premium went up, it was limited based on how much your SSDI payment increased.

Will there be another raise in 2024 and beyond?

Yes, Social Security announces a new COLA every year in October for the following January. The size of each year's COLA depends on inflation during that year. Some years have larger COLAs, and some have smaller ones. You can check the Social Security website in October to see what the next year's COLA will be.