SSDI payments went up 8.7 percent in 2023

Yes. The Social Security Administration announced in October 2022 that SSDI payments would increase by 8.7 percent starting January 2023. This was the largest cost-of-living adjustment (COLA) in four decades. If you were receiving SSDI in December 2022, your January 2023 payment was automatically higher — you did not have to do anything to receive it.

The 8.7 percent increase applied to your full monthly benefit amount. If you were receiving $1,000 per month in December 2022, your January 2023 payment became $1,087. The increase also applied to any family members receiving benefits on your record, such as a spouse or child.

This adjustment happened because inflation — the rise in the cost of goods and services — was significantly higher in 2022 than in previous years. Social Security calculates COLA each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures price changes across the economy. When inflation is high, COLA is high.

Key Takeaways

  • SSDI payments increased 8.7 percent in January 2023, the largest adjustment since 1983.
  • The increase was automatic for all current beneficiaries; no action was required to receive the higher payment.
  • Family members receiving benefits on your record also received the same 8.7 percent increase.
  • The adjustment was based on inflation measured during 2022, when prices rose faster than in previous years.

How the 2023 increase compared to previous years

The 8.7 percent COLA for 2023 was unusually large. In the five years before 2023, COLA adjustments ranged from 1.3 percent to 5.9 percent. The 2022 adjustment was 5.9 percent, and the 2021 adjustment was 1.3 percent. Going back further, the last time COLA exceeded 8 percent was in 1983, when it was 11.2 percent.

The reason for the 2023 spike was the rapid inflation that occurred throughout 2022. Prices for groceries, gasoline, housing, and other essentials rose sharply. The Social Security Administration's formula captures these price increases and translates them into a percentage adjustment to benefits. A higher inflation rate in the measurement period means a higher COLA the following year.

It is important to understand that COLA adjustments are not may provide to increase every year. In some years, inflation is low or prices actually fall, which can result in no adjustment or even a reduction. However, current law prevents COLA from reducing benefits below the prior year's amount, so your payment will never go down due to COLA.

When the increase appeared in your bank account

If you received SSDI in 2023, the 8.7 percent increase appeared in your payment on the third day of January 2023. Social Security pays beneficiaries on different days of the month depending on when you were born. Most people receive payments between the 3rd and the 20th of each month. Your January payment reflected the new, higher amount.

You should have received a notice from Social Security in December 2022 explaining the 2023 COLA adjustment. This notice, called the "Notice of Benefit Amount," showed your old monthly payment and your new monthly payment. If you did not receive this notice, you could have looked up the adjustment on your my Social Security account online or called Social Security at 1-800-772-1213.

What the increase meant for your work incentives and earnings limits

The 8.7 percent increase to your SSDI payment did not change the rules about how much you can earn while receiving benefits. SSDI has an earnings limit called the Substantial Gainful Activity (SGA) level, which is the amount of monthly income that Social Security considers "work." In 2023, the SGA level was $1,470 per month for non-blind beneficiaries and $3,822 per month for blind beneficiaries.

These SGA limits also increased in 2023, but they are set separately from COLA and are based on national wage trends, not inflation. The 2023 SGA increase was 8.7 percent as well, but this was coincidental — the two adjustments are calculated using different methods. If you were working and earning close to the SGA limit, the higher limit in 2023 meant you could earn slightly more without risking your SSDI status.

Other work incentives, such as the Plan to Achieve Self-Support (PASS) and the Impairment Related Work Expenses (IRWE) deduction, also had limits that increased in 2023. These limits change annually and are tied to wage data, not COLA. If you use any of these work incentives, your Social Security representative can tell you the current limits.

How COLA affects Medicare premiums and other deductions

The 8.7 percent increase to your SSDI payment was the gross amount before any deductions. If you were enrolled in Medicare Part B, Part D, or both, your premiums were deducted from your SSDI payment. In 2023, Medicare Part B premiums increased, which reduced the net amount of your SSDI payment increase.

For most beneficiaries, Social Security applies a "hold harmless" rule: your net SSDI payment (after Medicare deductions) cannot go down because of a Medicare premium increase. This means that if your Medicare premium went up more than your COLA adjustment, Social Security would absorb the difference and your payment would not decrease. However, this rule does not explore to people who are new to Medicare or who did not have Medicare premiums deducted in the prior year.

Other deductions from your SSDI payment, such as child support or court-ordered garnishments, are taken after COLA is applied. The 8.7 percent increase applied to your full benefit amount before these deductions were made.

What to expect for future COLA adjustments

The Social Security Administration announces the next year's COLA in mid-October each year. The 2024 COLA was announced in October 2023, and future adjustments will be announced on the same schedule. You can find the current and historical COLA percentages on the Social Security website or by calling 1-800-772-1213.

COLA adjustments depend entirely on inflation, which is unpredictable. If inflation remains moderate, future COLA adjustments will likely be smaller than the 2023 increase. If inflation rises again, COLA could be higher. Social Security has no control over COLA — it is set by a formula based on the Consumer Price Index, which is calculated by the U.S. Bureau of Labor Statistics.

Frequently Asked Questions

Did I have to do anything to get the 2023 SSDI increase?

No. The increase was automatic for all beneficiaries receiving SSDI in December 2022. You did not need to contact Social Security, submit any forms, or take any action. The higher payment appeared in your account in January 2023.

What if I started receiving SSDI after December 2022?

Your initial benefit amount was calculated using the 2023 payment rules, which already included the 8.7 percent COLA. You did not receive a separate increase notice because you were not a beneficiary in December 2022, but your first payment reflected the current benefit rates.

Can SSDI payments go down in future years?

COLA can result in no adjustment if inflation is very low, but current law prevents your SSDI payment from decreasing due to COLA. However, your payment can decrease if you return to work and earn above the SGA limit, or if your medical condition improves and you are no longer found disabled.

How does the COLA increase affect my taxes?

The higher SSDI payment may affect how much of your benefits are subject to federal income tax. If your combined income (SSDI plus other income) exceeds certain thresholds, a portion of your benefits becomes taxable. The 8.7 percent increase could push you over these thresholds. You can contact a tax professional or the IRS for guidance on your specific situation.

Where can I find out what my 2023 SSDI payment should be?

Log into your my Social Security account at ssa.gov to view your current payment amount. You can also call Social Security at 1-800-772-1213 or visit a local Social Security office. Have your Social Security number ready when you call.