The 2023 COLA raised 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 (COLA) in four decades. If you received SSDI in December 2022, your January 2023 payment reflected this increase automatically—you did not need to do anything to receive it.

The 8.7 percent figure applies to all SSDI beneficiaries. The actual dollar amount you received depended on what you were paid in December 2022. For example, if your December payment was $1,000, your January 2023 payment would have been approximately $1,087. The Social Security Administration sent notices to all beneficiaries in December 2022 showing their new payment amount.

This adjustment was larger than typical because inflation in 2022 was significantly higher than in previous years. COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures price changes across the economy. When prices rise faster, the COLA percentage rises with it.

Key Takeaways

  • The 2023 COLA of 8.7 percent was the largest adjustment since 1981, reflecting high inflation in 2022.
  • The increase took effect automatically in January 2023 for all SSDI beneficiaries receiving payments in December 2022.
  • Your new payment amount was based on your December 2022 payment multiplied by 1.087.
  • The Social Security Administration mailed notices in December 2022 showing the exact new payment amount for each beneficiary.

How the 2023 COLA was calculated

Social Security calculates COLA each year using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers. The SSA looks at the average CPI-W for July, August, and September of the current year and compares it to the same three months from the previous year. The percentage change between those two periods becomes the COLA for the following year.

For 2023, the CPI-W showed a 8.7 percent increase compared to 2022. This reflected the cost of goods and services rising across housing, food, transportation, and other categories. Because inflation was high throughout 2022, the COLA percentage was correspondingly high.

The Social Security Administration has no discretion in setting COLA. The calculation is automatic and based entirely on the CPI-W data. Congress does not vote on COLA amounts, and the President does not set them. The formula has been the same since 1975.

What the 2023 increase meant for different payment amounts

The 8.7 percent increase applied equally to everyone on SSDI, but the dollar amount of the raise varied based on what each person was receiving. Someone receiving $800 per month in December 2022 saw an increase of about $70. Someone receiving $1,200 per month saw an increase of about $104. Someone receiving $1,500 per month saw an increase of about $131.

The maximum SSDI payment in 2023 was $3,822 per month for a worker with a substantial work history. The 8.7 percent increase meant the maximum payment rose by approximately $333 from 2022 to 2023. However, most beneficiaries receive less than the maximum because their payments are based on their own earnings record.

If you were receiving Supplemental Security Income (SSI) in addition to SSDI, you received a separate COLA adjustment for SSI. The SSI COLA for 2023 was also 8.7 percent, but SSI has different payment caps and rules than SSDI.

When you received the 2023 increase

The 2023 COLA took effect on January 1, 2023. Your first payment reflecting the increase arrived in January 2023 (or early February, depending on your payment schedule). Social Security pays SSDI beneficiaries on different days of the month based on their birth date. If you were born on the 1st through the 10th, you received payment on the second Wednesday of the month. If you were born on the 11th through the 20th, you received payment on the third Wednesday. If you were born on the 21st through the 31st, you received payment on the fourth Wednesday.

You received a notice in the mail in December 2022 showing your new payment amount starting in January 2023. If you did not receive a notice, you could contact Social Security at 1-800-772-1213 to confirm your new payment amount. The notice included your new monthly payment and explained that the increase was due to the 2023 COLA.

COLA and your other benefits

If you received benefits as a family member on someone else's SSDI record—for example, as a spouse or child—you also received the 8.7 percent increase in January 2023. Family members' benefits are calculated as a percentage of the primary beneficiary's payment, so when the primary payment increased, family payments increased proportionally.

If you were receiving Medicare as an SSDI beneficiary, your Medicare premiums may have changed in 2023. The standard Medicare Part B premium for 2023 was $164.90 per month, though some beneficiaries paid different amounts based on their income. The increase in your SSDI payment did not automatically change your Medicare premium, but changes in your income could affect what you pay.

If you were receiving Medicaid, the 2023 COLA increase to your SSDI payment could have affected your Medicaid status depending on your state's income limits. Some states use SSDI payment amounts to determine Medicaid may be able to access. You should contact your state Medicaid office if you were unsure whether the increase affected your coverage.

How COLA differs from year to year

The 8.7 percent COLA for 2023 was unusually large. In recent years before 2023, COLA adjustments were much smaller. For 2022, the COLA was 5.9 percent. For 2021, it was 1.3 percent. For 2020, it was 1.7 percent. The size of COLA depends entirely on inflation rates in the economy, which vary from year to year.

In some years, inflation is so low that COLA is zero. This happened in 2010, 2011, and 2016. When COLA is zero, SSDI payments stay the same from one year to the next. In other years, when inflation is high, COLA can be 5 percent or more. The 8.7 percent adjustment for 2023 was exceptional because 2022 saw historically high inflation.

Future COLA amounts will depend on inflation rates going forward. The Social Security Administration announces each year's COLA in October, effective the following January. You can find current and historical COLA information on the Social Security Administration website.

Frequently Asked Questions

Did I have to do anything to receive the 2023 COLA increase?

No. The increase was automatic for all SSDI beneficiaries. You received the higher payment in January 2023 without taking any action. Social Security sent you a notice in December 2022 showing your new payment amount.

What if I started receiving SSDI after December 2022?

If you began receiving SSDI in January 2023 or later, your initial payment was calculated using the 2023 payment rates, which already included the COLA increase. You did not receive a separate increase because you were not receiving payments in December 2022.

Does the COLA increase affect how much I can earn while on SSDI?

No. The COLA increase does not change the Substantial Gainful Activity (SGA) limit, which is the amount of monthly earnings that can affect your SSDI benefits. The SGA limit is set separately each year and is based on different economic data than COLA.

If I'm also receiving SSI, did I get two separate increases?

Yes. SSDI and SSI are separate programs with separate COLA calculations. If you received both in December 2022, you received an 8.7 percent increase to your SSDI payment and an 8.7 percent increase to your SSI payment (though the dollar amounts differed because the programs have different payment structures).

Can I find out what my COLA increase was in dollars?

Yes. Subtract your December 2022 payment from your January 2023 payment. The difference is your COLA increase in dollars. You can also contact Social Security at 1-800-772-1213 and ask them to tell you the increase amount. Your payment notice from December 2022 should also show both the old and new amounts.