Amid soaring inflation rates not seen in over four decades, 2023 brought seismic shifts to Social Security. From a significant jump in the cost-of-living adjustment (COLA) to alterations in disability thresholds, this year is poised to reshape the Social Security landscape.
Let’s unpack the most significant changes hitting the beneficiaries, as detailed by the latest Social Security Administration (SSA) report, that defines exactly how beneficiaries and recipients will be their payments changed due to the COLA increase, and their requirements thresholds modified, among other things to consider.
2023 Brought the Biggest Social Security COLA Increase in 41 Years
2023 came with an 8.7% spike in the Social Security COLA, marking its steepest ascent since the 11.2% hike back in 1981. This dramatic rise stems directly from the surging inflation rate, the highest in the last 41 years. Consequently, the average monthly Social Security payout for retirees has swollen by $146, shifting from $1,681 to an estimated $1,827. This has nothing to do with what will happen in 2024 with the COLA, which is expected to rise much less.
For the vast majority benefiting from Social Security, this enhanced payment started rolling out in January 2023. However, those on Supplemental Security Income (SSI) began receiving their adjusted amounts a tad earlier, on December 30, 2022. Notably, this 8.7% COLA adjustment isn’t universal. Depending on factors such as your primary insurance amount (PIA) and Medicare enrollment timing, your increment could be higher or lower. The SSA has dispatched detailed COLA notifications to all beneficiaries to offer clarity on their updated payments.
2023 SSA Disability Earnings Limits: What’s New?
Social Security isn’t just for the elderly. The SSA extends monthly benefits to individuals sidelined from work due to disabilities. Typically, these perks persist until the recipient can resume regular employment. Interestingly, even if you’re currently working, specific medical conditions can still classify you as ‘disabled’, capping your earnings. Surpassing this cap can disqualify your disability status. Here’s a glance at how these thresholds have evolved in 2023:
For Non-Blind Individuals:
- 2022: $1,350/month
- 2023: $1,470/month
For Blind Individuals:
- 2022: $2,260/month
- 2023: $2,460/month
During the Trial Work Period (TWP):
- 2022: $970/month
- 2023: $1,050/month
2024 Comes with a Smaller COLA Adjustment
If you are a recipient of Social Security benefits, you can anticipate a forthcoming increase in your payments commencing in the year 2024, in response to the prevailing inflationary conditions. The most recent inflation data for the month of August has suggested that the COLA increase for Social Security is expected to be 3.2%, as reported by the Senior Citizens League.
Keep in mind that the final COLA adjustment will be revealed only in October 2023, and we are a few days away from knowing exactly when the increase in payment will be.
Learn How to Calculate Your Social Security Benefits
Social Security benefit calculations takes into consideration a plurality of factors. It’s a complex web where your financial history, age, and the timing of your benefit claims all play pivotal roles. We’ll try to untangle it for you. At the heart of it all lies your Social Security benefit, a sum derived from your lifetime earnings through employment where you dutifully paid your Social Security taxes. Specifically, this calculation revolves around your highest 35 years of salary history, forming the basis of your potential benefits.
Now, the decision of when to kickstart this financial lifeline is in your hands. The minimum retirement age of 62 beckons, but here’s the twist: the longer you wait, the bigger your monthly payment. The full retirement age (FRA) is pegged at 66 or 67, depending on your birth year, and it’s only when you reach this milestone that you’ll unlock the maximum monthly benefit. Beyond the age of 70, however, your payments won’t see any further increments.
But hold on, your marital status isn’t sitting this one out either. If you’ve endured a divorce after a decade of marriage, there’s potential to attach your Social Security payments to your ex-spouse’s earnings. For those who’ve faced the loss of a spouse, there’s a silver lining. Widows and widowers who are at least 60 years old and were married for a minimum of nine months prior to their spouse’s passing may find themselves entitled to survivor’s benefits.
Yet, the intricacies don’t end there. If you’ve ventured into the realm of state or local government employment for over a decade, it could have an impact on your Social Security payment. Indeed, participation in the civil service retirement program might lead to a reduction in your expected benefits.
How much can a non-blind individual with disabilities earn per month in 2023 and 2022?
In 2023, the Substantial Gainful Activity (SGA) limit for non-blind recipients of Social Security Disability Insurance (SSDI) benefits is $1,470 per month. This means that a non-blind individual with disabilities can earn up to $1,470 per month without affecting their SSDI benefits. If they earn over this amount, they might enter a trial work period, and if they consistently earn over the SGA limit, they might lose their benefits.
In 2022, the SGA limit for non-blind recipients was $1,350 per month.
How much can a blind individual with disabilities earn per month in 2023 and 2022?
In 2023, blind SSDI applicants are allowed to make up to $2,460 per month and still be considered disabled. The upper income limit for all SSI applicants, including those who are blind, is about $1,900 per month.
For 2022, the monthly income limit for blind individuals was $2,260.
Medicare Open Enrollment for 2024 Is Coming Soon: What Are Your Options?
As Autumn comes into the calendar, 65 million Americans are about to take the adventure to review their healthcare options. The open enrollment period for Medicare healthcare plans is approaching, running from October 15 to December 7, and here’s all that you can do during this time gap.
Medicare health and drug plans undergo changes each year, tweaking aspects like costs, coverage, and the extensive network of healthcare providers and pharmacies at their disposal. During open enrollment, individuals with Medicare have the golden opportunity to reassess their health plans and prescription drug coverage for the upcoming year. This flexibility allows them to align their choices with any health shifts, financial considerations, or evolving needs.
First, you have the classic Medicare, offered by the federal government, coupled with various drug supplement options. Alternatively, you can delve into the vast market of Medicare Advantage plans, provided by private insurers who have earned the coveted Medicare stamp of approval.
In the previous year alone, the nation saw the availability of nearly 4,000 Medicare Advantage plans. This is more than double the number available in 2018 and represents the highest count since 2010. That gives you and your family a bunch of options, and the choice becomes tricky.
Some things you must consider, if you’re thinking about reviewing your healthcare plan, are:
- Begin by evaluating your existing plan. Take note of any changes in your health, prescription drug needs, or financial circumstances that may have occurred since your last enrollment.
- Original Medicare, offered by the federal government, comprises Part A (Hospital Insurance) and Part B (Medical Insurance). Take into account what these components cover and their associated costs. Part A typically covers hospital stays, while Part B includes services like doctor’s visits and outpatient care.
- Medicare Advantage plans are a robust alternative to Original Medicare. These plans, provided by private insurers, often include Part D prescription drug coverage and may offer additional benefits like dental, vision, and wellness programs.
- Costs vary widely between different Medicare plans. Analyze premiums, deductibles, and co-payments, along with any potential out-of-pocket maximums. Consider how these costs align with your budget and expected healthcare usage.
- Evaluate your healthcare provider’s network, as out-of-network care can result in significantly higher costs.
- Finally, assess the prescription drug coverage offered by each plan. Look for plans that cover your specific medications with reasonable co-pays or co-insurance.