Recipients of Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) may have noticed that their payments went up dramatically at the beginning of 2023. While not unwelcome, it may seem odd why SSDI and SSI payments went up so much. Why did this happen, and what does it potentially mean for the future of SSDI and SSI?
Why Did SSDI and SSI Payments Go Up?
SSDI and SSI payments both went up by 8.7% at the beginning of 2023, the single largest increase in Social Security disability benefits since 1981. This dramatic increase in payments is related to the Cost of Living Adjustment, also known as the COLA for short. The COLA creates an automatic increase in benefits based on changes in the cost of living, which is meant to reflect increased costs for basic goods and services.
How is the COLA Determined?
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This measurement is determined by the Bureau of Labor Statistics in the Department of Labor, and is meant to reflect the increase in certain basic goods and services that are considered essential for survival. The Social Security Administration takes the CPI-W calculation from the Department of Labor, then adjusts the COLA accordingly.
Why Was the COLA So High This Year?
The reason that the COLA went up so much this year is because of an unusually high inflation rate, which helped to drive up prices for many essential goods and services. The COLA is meant to adjust for that, leading to a substantial increase in the amount of money being sent to SSDI and SSI recipients. In real terms, the increase in payments is simply there to help keep beneficiaries afloat in the face of economic instability.
What Does This Mean for SSDI and SSI Going Forward?
In all likelihood, this large increase in SSDI and SSI benefits is an anomaly, the result of unusually high inflation leading to a large increase in the cost of living. As inflation flattens out, the COLA is likely to return to more regular increases, which are normally in the range of 2 to 3%. However, if the economy continues to show signs of instability, it could result in another large increase to SSDI and SSI payment in the future.
If you or a loved one need assistance applying for SSDI or SSI benefits, it is important that you seek the guidance of an experienced Social Security Disability benefits lawyer. The lawyers at Sullivan & Kehoe, LLP have over 50 years of combined experience between its attorneys and are available to you or your loved one in obtaining Social Security Disability or Supplemental Security Income benefits. To schedule a consultation with our New York Social Security Disability benefits lawyers, call (631) 823-7155.