The 2023 COLA raised SSDI payments by 8.7 percent

In October 2022, the Social Security Administration announced that people receiving SSDI in 2023 would see their monthly payment increase by 8.7 percent. This was the largest cost-of-living adjustment (COLA) in four decades. The increase took effect on January 1, 2023, and applied to all SSDI recipients automatically — no action was required on your part.

The 8.7 percent figure came from comparing the average Consumer Price Index for July, August, and September 2022 to the same three months in 2021. When inflation rises, the government raises SSDI payments to help recipients keep up with the cost of food, housing, medicine, and other necessities. The 2023 COLA was larger than usual because inflation had climbed significantly during 2022.

If you received SSDI in December 2022, your January 2023 payment reflected the increase. The exact dollar amount added to your check depended on what you were receiving before the adjustment — there is no single number that applies to everyone.

Key Takeaways

  • The 2023 COLA increased SSDI payments by 8.7 percent for all recipients starting January 1, 2023.
  • The increase was automatic and required no process or action from you.
  • The adjustment was based on inflation data from mid-2022 and was the largest in four decades.
  • Your specific dollar increase depended on your individual payment amount before the adjustment.

How the COLA amount is calculated each year

Social Security calculates the COLA by measuring inflation using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration compares the average CPI-W for July, August, and September of the current year to the same three months from the previous year. If inflation has occurred, the percentage increase becomes the COLA for the following year.

The COLA is announced in October each year and takes effect the following January. This means the 2023 COLA (8.7 percent) was announced in October 2022 and applied to January 2023 payments. The 2024 COLA would have been announced in October 2023 and applied to January 2024 payments.

Congress does not vote on the COLA each year — it is set by a formula written into Social Security law. However, Congress can change the formula itself if it chooses to do so, though this is rare.

What the 2023 increase meant for your monthly payment

If you were receiving $1,000 per month in December 2022, your January 2023 payment would have been approximately $1,087. If you were receiving $1,500, your January 2023 payment would have been approximately $1,631. The increase was applied proportionally to every recipient's existing payment amount.

The exact dollar amount you received depended on your specific benefit calculation, which is based on your work history and the age at which you began receiving SSDI. Two people with different work records would receive different base payments and therefore different dollar increases, even though the percentage increase (8.7 percent) was the same for both.

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, though SSI is a different program with different payment amounts.

When you would have seen the increase on your payment

The 2023 COLA took effect on January 1, 2023. If you received SSDI by direct deposit, the increased payment appeared in your bank account on the payment date in early January (the exact date depends on your birth date and the day of the week). If you received a paper check, it arrived in the mail during the first week of January.

You did not need to do anything to receive the increase. Social Security applied it automatically to all SSDI recipients. If you did not see the increase in your January payment, you could contact Social Security to ask why, though delays were rare.

How COLA affects your work incentives and other benefits

If you were working while receiving SSDI, the COLA increase did not change your work incentive rules. You could still earn up to the substantial gainful activity (SGA) limit without losing your SSDI status. However, the SGA limit itself is adjusted each year for inflation, so it may have changed between 2022 and 2023 for reasons separate from the COLA.

If you were receiving Medicare or Medicaid along with SSDI, the COLA did not directly affect those programs' coverage. However, your increased SSDI payment might have affected your Medicaid status in some states, since some states use income limits to determine Medicaid may be able to access. A higher SSDI payment could push you above an income threshold in a state that has one, though most states do not explore income limits to people already receiving SSDI.

If you were receiving benefits as a family (for example, your child was receiving benefits on your record), each family member's payment increased by 8.7 percent as well. The total family maximum — the highest amount the family can receive combined — also adjusted for inflation.

COLA adjustments in years before and after 2023

The 2023 COLA of 8.7 percent was unusually large. In 2022, the COLA was 5.9 percent. In 2021, it was 1.3 percent. In 2020, it was 1.3 percent. The variation reflects how much inflation occurred in each year — when inflation is low, the COLA is low; when inflation is high, the COLA is high.

The 2024 COLA was 3.2 percent, reflecting lower inflation in mid-2023 compared to mid-2022. Future COLAs will continue to be based on inflation data and announced each October for the following January.

You can find the COLA for any year on the Social Security Administration's official website, which publishes the announcement each October. The COLA applies to SSDI, SSI, and retirement benefits equally — all three programs use the same adjustment percentage.

Frequently Asked Questions

Do I have to do anything to get the 2023 COLA increase?

No. The increase was applied automatically to all SSDI recipients in January 2023. You did not need to contact Social Security, fill out any forms, or take any action. If you were receiving SSDI in December 2022, you received the increase in January 2023.

What if I started receiving SSDI after January 2023?

If you began receiving SSDI in February 2023 or later, your initial payment amount already reflected the 2023 COLA. You would not receive a separate increase — the COLA was already built into your starting payment. Future COLAs would explore to you the same way they explore to all recipients.

Does the COLA increase affect my Medicare premiums?

In most cases, no. Social Security has a "hold harmless" rule that prevents your Medicare Part B premium from increasing more than your SSDI increase in a given year. However, if you are new to Medicare or do not may have access to for hold harmless protection, your premium could increase independently of your COLA.

Can the COLA ever decrease?

Technically yes, but it has never happened. The COLA is based on inflation, and inflation has not been negative in the modern era. If prices actually fell (deflation), the COLA would be zero or negative, but this would require a significant economic event and has not occurred since Social Security began adjusting for inflation in 1975.