Social Security Announces 8.7 Percent Benefit COLA Increase for 2023
On October 13, 2022, the Social Security Administration (SSA) announced an 8.7% increase in benefit payments, this is the Fourth Largest benefit increase in the history of the program.
Congress enacted the Cost-of-Living AdjustmentSocial Security benefits and Supplemental Security Income (SSI) payments may be increased in the year following an increase in the cost of living (inflation). (COLASocial Security benefits and Supplemental Security Income (SSI) payments may be increased in the year following an increase in the cost of living (inflation).) in 1972, but they only began making year over year changes in 1975. Prior to 1975, increases were only made when Congress enacted special legislation. As you well know, special legislation does not happen often in Washington, so increases in benefits were rare. As a result of the 1972 Act, Social Security Disability (SSD) and Supplemental Income (SSIA federal supplemental income program funded by general tax revenues (not Social Security taxes). It helps aged, blind, and disabled people who have limited income and resources by providing monthly cash payments to meet basic needs for food, clothing, and shelter. For more information, see Supplemental Security Income (SSI).) benefits are automatically adjusted annually to reflect increases in inflation. The purpose of the COLA is to ensure that the purchasing power of SSD and SSI benefits are not eroded over time by inflation.
The 8.7 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 65 million Social Security beneficiaries in January 2023.
In 2022, a 5.9% COLA occurred. This was the largest COLA in over 40 years. The 8.7% increase announced today is even larger still. History buffs might want to know that this increase is the 4th largest in the history of the COLAs. This increase will be reflected in January benefits. For those that receive benefit payments on the 1st of the month, you will receive the increase on December 30th as 12/31 and 1/1 are holidays.
Read more about the Social Security Cost-of-Living adjustment for 2023.
History of Automatic Cost-Of-Living Adjustments (COLA)
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI)A federal supplemental income program funded by general tax revenues (not Social Security taxes). It helps aged, blind, and disabled people who have limited income and resources by providing monthly cash payments to meet basic needs for food, clothing, and shelter. For more information, see Supplemental Security Income (SSI). benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price IndexThe measure of the average change over time in the prices paid for goods and services to determine cost of living adjustments. for Urban Wage Earners and Clerical Workers (CPI-WThe measure of the average change over time in the prices paid for goods and services to determine cost of living adjustments.) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
The SSA has updated it’s fact sheet to demonstrate that the average benefit increase for all disabled workers is going from $1,36 per month to $1,483 per month, which is an average increase of $119 per month. A disabled worker, spouseYou are the spouse of the worker if: – You and the worker were married at the time you filed for benefits. – You would have the status of a husband or a wife for that person’s personal property if they had no will. – You went through a marriage ceremony in good faith, which would have been valid except for a legal impediment.” and one or more children will see an average increase of over $200 per month. While maximum benefits for SSD increased by $282 per month and maximum monthly benefits for SSI increased by $73 for an individual and $110 for a couple.
Historically these increases were cannibalized by increases in MedicareThe federal health insurance program for: People 65 years of age or older. Certain younger people with disabilities. People with permanent kidney failure with dialysis or a transplant, sometimes called ESRD (End-Stage Renal Disease). For more information, see Medicare Benefits and the Official U.S. Government Site for Medicare. premiums, but this year, Medicare premiums are going down for the first time in over a decade. Not only will beneficiaries get the increased benefit, but they will also see a savings in their Medicare costs.
Generally, you will find out the exact amount of your increase through a mailing starting in early December. If you would like to find out sooner, your COLA notice will be viewable online at my Social Security.
As an aside, this will also increase SGA as well. In 2023, you will be able to make up to $1,470 without it negatively impacting your Social Security Disability benefit.
Medicare Information
Medicare Information about Medicare changes for 2023 is available at www.medicare.gov. For Social Security beneficiaries enrolled in Medicare, their new higher 2023 benefit amount will be available in December through the mailed COLA notice and my Social Security’s Message Center.
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