The 2023 COLA increased SSDI payments by 8.7 percent

In October 2022, the Social Security Administration announced that SSDI payments would increase by 8.7 percent starting in January 2023. This was the largest cost of living adjustment in four decades. 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 through the third quarter of 2022.

The actual dollar amount of your increase depended on what you were receiving before January 2023. Someone getting $1,000 per month would have received an $87 increase, bringing their check to $1,087. Someone getting $1,500 would have seen a $130.50 increase. The Social Security Administration sent notices in December 2022 showing the exact new amount.

This increase applied to all SSDI beneficiaries whose payments began before January 2023. If you were already on the rolls, your new amount took effect automatically on your January 2023 payment. You did not need to contact Social Security or take any action to receive it.

Key Takeaways

  • The 2023 COLA was 8.7 percent, meaning every SSDI payment increased by that percentage starting in January 2023.
  • Your specific dollar increase depended on your prior monthly amount — a $1,000 check became $1,087, a $1,500 check became $1,630.50.
  • Social Security mailed notices in December 2022 showing your new payment amount, and the increase took effect automatically with no action required.
  • The 2023 increase was based on inflation data from mid-2021 through mid-2022, which reflected the sharp rise in consumer prices during that period.

How the 8.7 percent was calculated

The COLA percentage is set by law and is not chosen by Social Security. It is calculated by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of one year to the third quarter of the previous year. If the index is higher, the difference becomes the COLA percentage. If the index is the same or lower, the COLA is zero — benefits do not decrease.

For 2023, the CPI-W rose 8.7 percent between July-September 2021 and July-September 2022. That period captured the rapid increase in prices for food, energy, housing, and goods that followed the pandemic. The announcement came in October 2022, giving Social Security time to reprogram payment systems and mail notices before the January 2023 effective date.

This method means the COLA always lags behind the current year. The 2023 COLA reflected 2021-2022 inflation. The 2024 COLA would reflect 2022-2023 inflation, and so on. If inflation was high in early 2023 but lower by mid-2023, the 2024 COLA would be lower than 2023's, even if you felt prices were still rising.

What happened if you turned 62 or became disabled in 2023

If you started receiving SSDI in 2023 or later, your first payment was based on the new, higher benefit amount — you did not receive the old amount and then get a raise. Social Security recalculates the Primary Insurance Amount (PIA), which is the base benefit, using current wage records and the current bend points. The bend points themselves are adjusted each year based on national wage growth, not the COLA.

This means someone who became disabled in March 2023 would have a different starting benefit than someone who became disabled in March 2022, even if their work history was identical. The difference came from the bend point adjustment, not the COLA. The COLA only affects people already on the rolls.

How the increase affected your Medicare premiums

Most SSDI beneficiaries also pay Medicare Part B premiums, which are deducted from the SSDI check. In 2023, the standard Part B premium was $164.90 per month, up from $170.10 in 2022. However, because of a rule called the "hold harmless" provision, most beneficiaries who were already on Medicare before 2023 did not see their net SSDI payment decrease when the premium rose in prior years.

The hold harmless rule meant that your SSDI check could not fall below what you received in the prior month, even if Medicare premiums went up. When the 2023 COLA arrived, you received the full 8.7 percent increase on top of whatever you were getting in December 2022. The premium decrease in 2023 was a separate matter and did not reduce the benefit of the COLA.

If you were not yet on Medicare or had a different coverage situation, your net increase from the COLA depended on your specific premium and deductions. Supplemental Security Income (SSI) beneficiaries, who are a different program, had different rules about how premiums and deductions worked.

Comparing 2023 to other recent COLA years

The 2023 COLA of 8.7 percent was historically large. For context, the 2022 COLA was 5.9 percent, the 2021 COLA was 1.3 percent, and the 2020 COLA was 1.6 percent. Before 2022, you had to go back to 2011 to find a COLA above 3 percent. The 2008 COLA was 5.8 percent, which occurred during the financial crisis and the spike in oil and food prices.

A larger COLA does not mean your life got easier — it usually means inflation was high enough that the government had to raise benefits to keep pace with rising costs. The 2023 COLA reflected the fact that prices for groceries, rent, utilities, and other necessities had risen sharply. Whether an 8.7 percent benefit increase kept up with your actual costs depended on what you spent money on and where you lived.

What to do if you did not receive the increase

If your January 2023 payment did not include the 8.7 percent increase, contact Social Security when ready. Call 1-800-772-1213 (TTY 1-800-325-0778) or visit your local Social Security office. Have your Social Security number and a recent payment stub ready.

Possible reasons for a missing increase include: a representative payee or work incentive program that affected your payment, a suspension or overpayment offset that reduced your check, or a processing error. Social Security can look up your account and explain what happened. If there was an error, they can correct it and issue a back payment.

Do not assume the increase was applied if you did not see a notice or if your check amount did not change. Some beneficiaries have their payments reduced by other factors at the same time the COLA is applied, which can make the net change hard to spot. Calling to verify takes a few minutes and ensures you are receiving what you are may have access to to.

Frequently Asked Questions

Will my SSDI increase again in 2024?

Yes, there will be a 2024 COLA, but the percentage will be different from 2023. The 2024 COLA was 3.2 percent, announced in October 2023. It was lower than 2023 because inflation slowed between mid-2022 and mid-2023. Future COLAs depend on inflation data and cannot be predicted in advance.

Does the COLA explore to my family members who receive benefits on my record?

Yes. If your spouse, ex-spouse, or children receive benefits based on your work record, they also receive the same COLA percentage increase. The amount varies by person because family benefits are calculated as a percentage of your Primary Insurance Amount, but the percentage increase is the same for everyone on your record.

What if I was in prison or outside the United States during 2023?

If you were in prison, your SSDI payments were suspended and you did not receive the COLA increase while suspended. If you were released, your benefits would resume at the new 2023 amount. If you were outside the United States for more than six months, your payments may have been suspended; contact Social Security to restore them and receive any back pay owed.

Can I get a lump sum payment for the months between my last check and the 2023 increase?

No. The COLA is not retroactive. It applies only to payments made in January 2023 and later. If you received a payment in December 2022, that payment was at the old rate. There is no catch-up payment for the difference.

How does the COLA affect my Supplemental Security Income (SSI)?

SSI is a different program from SSDI and has its own COLA rules. The 2023 SSI federal benefit rate also increased by 8.7 percent, but SSI has resource limits and income counting rules that SSDI does not have. If you receive both SSDI and SSI, contact Social Security to understand how the increase affected your specific situation.