The 2023 COLA raised SSDI payments by 8.7 percent

In October 2023, Social Security increased all SSDI monthly payments by 8.7 percent. This was the largest cost of living adjustment (COLA) since 1981. The increase took effect with the November 2023 payment, which most recipients received on the third of the month (or the second Wednesday if you receive payments by direct deposit to a bank account).

The 8.7 percent figure was calculated by comparing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2022 to the third quarter of 2023. Because inflation was unusually high during that period, the adjustment was larger than the typical 1 to 3 percent increases that occurred in most years before 2021.

If you received SSDI in November 2023 or later, your payment already reflected this increase. You did not need to do anything to receive it — Social Security applied it automatically to your account.

Key Takeaways

  • The 2023 COLA of 8.7 percent was the largest increase since 1981 and applied to all SSDI beneficiaries starting with their November 2023 payment.
  • Your new payment amount was based on your prior benefit, multiplied by 1.087 — so a $1,200 monthly payment became approximately $1,304.
  • The increase also raised the Substantial Gainful Activity (SGA) threshold and other SSDI work incentive limits for 2024, affecting how much you can earn while on benefits.
  • If you received a notice from Social Security in October 2023 showing your new payment amount, that notice was your official record of the change.
  • The 2023 COLA did not change your Medicare or Medicaid coverage — those programs continued under the same rules.

How the 8.7 percent was calculated

Social Security calculates COLA each year using a specific formula. The agency compares the average Consumer Price Index for the third quarter of the current year to the average for the third quarter of the prior year. The percentage change becomes the COLA for the following year.

For 2023, the CPI-W rose from 296.276 in the third quarter of 2022 to 322.271 in the third quarter of 2023. That 8.7 percent increase reflected the cost of goods and services that urban wage earners and clerical workers actually purchased — food, housing, transportation, medical care, and other necessities. Because inflation spiked in 2022 and remained elevated through mid-2023, the adjustment was much larger than historical norms.

Congress does not vote on COLA each year. The law (42 U.S.C. § 415(i)) requires Social Security to calculate and explore it automatically. This means the increase happened without any legislative action or delay.

What your new payment amount was

Your November 2023 SSDI payment was your prior monthly benefit multiplied by 1.087. If you received $1,000 per month before the increase, your new payment was approximately $1,087. If you received $1,500, your new payment was approximately $1,630.50.

Social Security sent a notice in October 2023 showing your exact new payment amount. This notice also listed your new Medicare premiums if you were enrolled in Medicare Part B or Part D, because those premiums are deducted from your SSDI payment. The notice was mailed to the address on file with Social Security, or you could view it online through your my Social Security account.

If you did not receive a notice or cannot locate it, you can log into my Social Security at ssa.gov to view your current payment amount, or call Social Security at 1-800-772-1213 (TTY 1-800-325-0778) to confirm the figure.

How the 2023 COLA affected work incentives and earnings limits

The 8.7 percent increase also raised several dollar amounts that affect SSDI work incentives. The most important is the Substantial Gainful Activity (SGA) threshold, which is the monthly earnings limit above which Social Security assumes you are working at a level that prevents you from receiving SSDI.

For 2023, the SGA threshold was $1,470 per month (or $2,460 for blind beneficiaries). This meant that if you earned more than $1,470 in a month, Social Security could find that you were performing substantial gainful activity and suspend or terminate your benefits. For 2024, this threshold increased to $1,550 per month ($2,590 for blind beneficiaries), reflecting the 8.7 percent COLA.

Other work incentive limits also increased by 8.7 percent. The Trial Work Period (TWP) threshold — the amount you can earn in a month without it counting toward your nine-month TWP — rose from $970 to $1,050. The Plan to Achieve Self-Support (PASS) program's income and resource limits also increased proportionally. If you were using any of these work incentives, Social Security sent you a separate notice explaining how the new limits affected your case.

The 2023 COLA and your Medicare and Medicaid coverage

The increase in your SSDI payment did not change your Medicare coverage. If you were already enrolled in Medicare Part A (hospital insurance) and Part B (medical insurance), your coverage continued without interruption. Your Part B premium was deducted from your SSDI payment, and the new premium amount (if it changed) was shown on your October 2023 notice.

For Medicaid, the rules vary by state. Some states use your SSDI payment amount to determine Medicaid may be able to access, while others do not. A few states have a "Medicaid Buy-In" program that allows you to work and earn more while keeping Medicaid. The 8.7 percent increase might have affected your Medicaid status in a state that uses income limits, but most states did not terminate coverage based on the COLA alone. If you had questions about your Medicaid coverage after the increase, you could contact your state Medicaid office or your local Social Security office.

Why 2023 was different from most other years

The 8.7 percent COLA in 2023 was exceptional. Between 2009 and 2020, annual COLAs ranged from 0 percent (in 2010 and 2011) to 2.8 percent (in 2018). The average was less than 1.5 percent per year. This meant that for more than a decade, SSDI payments barely kept pace with inflation.

In 2021 and 2022, inflation accelerated sharply due to pandemic-related supply chain disruptions, increased consumer demand, and federal spending. The CPI-W rose 5.9 percent in 2021 and 8.7 percent in 2022. This pushed the 2022 COLA to 8.7 percent and the 2023 COLA to 8.7 percent as well. By late 2023 and into 2024, inflation had cooled, which meant the 2024 COLA (announced in October 2023) was 3.2 percent — closer to historical norms.

What to do if you did not receive the increase

If your November 2023 SSDI payment did not reflect 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 or bank statement showing your payment amount ready.

Errors are rare, but they can happen if your account has a hold, if you are subject to a work incentive rule that temporarily suspends your benefit, or if there is a processing error. Social Security can review your account and correct any mistake. If the error occurred in a prior month, Social Security can issue a back payment to cover the difference.

Frequently Asked Questions

Does the COLA increase affect my SSI (Supplemental Security Income) payment?

No. SSI is a different program with different rules. SSI payments are adjusted each year, but the adjustment is based on federal benefit rate changes set by Congress, not the same COLA formula used for SSDI. Your SSI payment amount may have changed in 2023, but it was not automatically 8.7 percent higher.

Will the 2023 COLA increase my taxes on SSDI benefits?

Possibly. SSDI benefits are taxable income if your combined income (SSDI plus half your SSDI plus other income) exceeds certain thresholds: $25,000 for single filers or $32,000 for married filing jointly. The 8.7 percent increase might have pushed you over that threshold. Consult a tax professional or contact the IRS for your specific situation.

Can I request a larger increase if I think 8.7 percent does not cover my actual costs?

No. The COLA is set by law and applies uniformly to all SSDI beneficiaries. You cannot request a higher increase. If you believe your costs have risen faster than your benefit, you may be able to work part-time using SSDI work incentives, or you may may have access to for other information programs like SNAP or LIHEAP.

What if I was in a work incentive program when the COLA took effect?

The COLA increased your benefit amount, but it did not change how your work incentive program operates. If you were in a Trial Work Period, Plan to Achieve Self-Support, or Impairment Related Work Expenses program, those programs continued under the same rules. The new SGA and other thresholds applied to your case going forward.