Social Security Changes for 2023: What Disability Recipients Can Expect This Year

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Social Security makes up over half of the annual income for 62% of retirees, and Social Security disability benefits provide crucial relief for 8.5 million disabled workers and 1.6 million of their loved ones. It’s a vital part of keeping millions of Americans out of poverty and in their homes.

However, COVID-19, a tumultuous economy, and unprecedented levels of inflation have made it difficult for retirees and existing SSD recipients to predict how Social Security will change in 2023. We’ve gathered some helpful information on what to expect this year.

Full Retirement Age Is Now 67

This won’t affect most SSD recipients, but if you were expecting to receive retirement benefits within the next few years, you may have to wait a little longer. The official retirement age is now 67 years old, for people turning 62 in 2023.

COLA Benefit Increase of 8.7%

Most years, there is a cost-of-living adjustment (COLA) to account for inflation. Recent inflation, which hit the highest levels seen in the past 40 years, has led to an 8.7% increase in Social Security benefits. This increase should protect recipients’ spending power. The new payment amount started at the beginning of 2023 for all Social Security recipients. For Supplemental Security Income (SSI) recipients, the increased benefits began on December 30, 2022. The Social Security Administration (SSA) mailed COLA notices to recipients detailing their new payments.

Exceptions to This Benefit Increase

It is important to note that an individual recipient's benefit increase may be slightly more or less than 8.7%, depending on such factors as when they signed up for Medicare and their primary insurance amount (PIA). The PIA is the amount indexed for you at the standard retirement age, which would then be increased if you wait longer than expected to retire or would be decreased if you retired early. So, after the 8.7% increase COLA calculation is made to your PIA, then further calculations are made to either increase or decrease your benefits, based on the timing of your retirement.

In this case, the final amount you receive would depend on whether you became disabled or your loved one away before turning 62 years old, and/or on whether you retired by 66 or 67 years of age.

COLA Increases & Medicare

Another reason you might see a higher than 8.7% increase in your benefits is if you have Medicare Part B, as the premiums are reduced this year. Since Social Security is decreased by the amount of your Medicare Part B premiums, a lower premium means less gets taken out of your Social Security payment. However, if you have only just signed up for Medicare in 2023, then you'll notice a first-time decrease in your Social Security that is due to the Medicare premium. If this year you changed from Original Medicare to a Medicare Advantage plan, this could also lead to a first-time deduction accordingly.

Threshold Increase for Early Filers

If someone files for Social Security retirement benefits early, they’re subject to the “retirement earnings” test, which withholds benefits for every dollar they make above a certain amount. For instance, people who won’t reach retirement age next year will have their Social Security benefits reduced by $1 for every $2 they earn above a certain threshold.

In years where there is a COLA adjustment, this threshold rises (which means early filers get more benefits and less withholding). In 2022, that threshold was $19,560. For 2023, the threshold increases to $21,240, allowing early filers to keep an additional $840.

Higher Income Threshold for Disabled Workers

As of November 2022, approximately 8.8 million disabled workers were receiving Social Security disability benefits. The average monthly benefit amount for these workers was $1,233. In addition to meeting disability requirements, a person receiving SSD benefits must not exceed a certain income threshold. This applies in situations where a worker’s condition may meet the SSA’s definition of disability, but they can still work and earn a living in some capacity. They can still receive SSD benefits, as long as they do not earn more than a certain amount per month.

In 2023, this threshold increased. For disabled workers who are not blind, the income threshold is now $1,470 per month. For disabled workers who are blind, the income threshold is now $2,460. This was a $120 and $110 increase, respectively.

Work Credits Might Be Harder to Earn

To receive any Social Security benefits, retirement or disability, workers must earn 40 work credits in their lifetime. This roughly amounts to about 10 years of work. You can only earn 4 work credits annually, and you earn 1 work credit per $1,640. To earn the maximum work credits for the year, you need to make $6,560 a year.

While this is still attainable for some disabled people who are able to work part time, the fact that the total amounts required for each work credit has increased yet again is not a great sign. This is particularly true when we've had yet another year where the increase in average wages is significantly lower than the rise inflation rates. That said, the COLA increase for 2023 and other changes can help many people gain the benefits they need to stay afloat in a tumultuous time.

If you have questions about your Social Security disability claim, speak with our Pennsylvania SSD attorneys in a free consultation! Let's discuss your options.

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