Supplemental Security Income: COLA 2023 Update
If you receive Supplemental Security Income (SSI), Social Security retirement benefits, or Social Security Disability Income (SSDI), you should get a boost in your monthly check this year, thanks to the Cost-of-Living Adjustment (COLA). Because of inflation increasing the cost of living in 2022, the COLA 2023 was one of the highest increases in recent history.
In this post, we’ll discuss the effect on Social Security income of the COLA 2023 update. A DC elder law attorney can answer your questions about how the COLA 2023 affects you. It is important to note that, despite SSI being so politically charged, SSI is still here and, in fact, SSI recipients received an increase in their benefits in 2023.
What Is COLA?
COLA is an automatic adjustment of certain benefits received based on increases in the cost of living. In 2023, about 70 million Americans received Supplemental Security Income (SSI), Social Security retirement, or Social Security Disability Income (SSDI) monthly checks. Their checks increased by 8.7 percent over what they received monthly in 2022.
You do not have to apply for a cost-of-living adjustment to your SSI or Social Security income check because the government automatically adjusts your benefits check, usually in December of the previous year. In other words, the 2023 COLA increase got applied to benefits checks sent out in December 2022. The SSI and Social Security payment schedule is monthly.
How the Federal Government Determines the COLA Amount
The Social Security Administration (SSA) does not simply pull a number randomly out of a hat for the COLA amount in a given year. Instead, they use the Consumer Price Index for that year as calculated by the Bureau of Labor Statistics of the Department of Labor. The Bureau determined the rampant inflation in 2022 increased the cost of living for consumers by 8.7 percent, so that number became the 2023 COLA.
If there was no COLA for SSI and Social Security income benefits, the purchasing power of a benefits check would get whittled away over the years to the point that recipients could not survive on their checks. Let’s say a person started receiving SSI in 2000. The average cost of a gallon of gas was $1.26. The average cost of a loaf of bread was $1.26. A pound of hamburger cost $2.46, on average.
According to the Bureau of Labor Statistics, in January 2023, the average cost in America of a loaf of white bread was $1.88, with wheat bread costing $2.50. A pound of hamburger cost $5.17, and a gallon of gas was $3.55. As you can see, a benefit check from SSI or Social Security would buy far less in 2023 than it did in 2000, which is why COLAs are necessary.
Qualifying for SSI and Social Security Income
Adults 65 years or older, or blind, or have a qualifying disability might be eligible for SSI benefits if they also meet the income and asset limitations. The SSA does not count all of a person’s income or assets toward the limit. Earnings limits can vary by year, so the earnings limits in 2023 might be different in 2024. Earnings limits are a complicated calculation. In 2023, the limit for countable assets is $2,000 for an individual and $3,000 for a couple.
To qualify for retirement Social Security income in 2023, a person must be at least 62 years old and have worked long enough in a job that paid Social Security taxes (work credits). For SSDI, a person must be blind or have another disability and have enough work credits. There is no Social Security income limit on these retirement or SSDI benefits.
The 2023 COLA
Of the 70 million SSI and Social security beneficiaries, 65 million receive some form of Social Security benefits, and more than 7 million receive SSI. The overlap is because some people receive both SSI and Social Security income. The average Social Security income benefits increase is more than $140 per month.
The History of Automatic COLAs
The SSA started applying cost-of-living adjustments in 1975, at a time when there was significant inflation. The 1975 COLA was 8.0 percent. The lowest COLA was 0 percent, in 2010, 2011, and 2016. The cost of living does not decrease the amount of Social Security income. COLAs can only increase a recipient’s monthly check or keep it the same, but never lower the amount.
Downsides to the 2023 COLA
Although the 2023 COLA made it easier for beneficiaries of SSI and Social Security income to put gas in the car or buy groceries, there are downsides to such a substantial increase in these benefits.
More beneficiaries will have to pay taxes on their benefits, which can wipe out much, if not all, of the increase in those benefits. People just below the threshold for having to pay taxes or were near the top of a tax bracket might see a net loss after taxes.
People who qualified for other benefits based on income might no longer be eligible for those benefits after the 2023 COLA increases their Social Security income. These income-based benefits include low-income changes to Medicare health and prescription drug benefits and eligibility for Medicaid benefits.
Many state and local benefits programs are based on need which relies on the amount of a person’s income as a significant factor. An 8.7 percent increase in an individual’s monthly SSI or Social Security income could disqualify them for assistance with housing, transportation, nutrition, energy costs, home health care, and day programs. The total dollar value of the programs a person might lose as a result of the 2023 COLA could greatly outweigh the amount their monthly SSI or Social Security income check increased.
Some of these negative consequences could get mitigated if the other benefit programs adjusted their financial qualification thresholds.
Getting Your COLA Notice
You should have received a notice of the amount of the 2023 COLA from the SSA. It is possible to access information about your Social Security benefits online. Be sure to go straight to the Social Security Administration’s website for this information rather than falling victim to a fraudulent telephone call or internet “phishing” scheme.
Talk to a DC elder law attorney about how your SSI and Social Security benefits work, contact Thienel Law today.
