When consumer prices go up in New Jersey, Social Security beneficiaries need a hedge to protect them. That’s where the annual COLA (cost-of-living adjustment) comes in. This is an essential update to SSDI benefits that survivors, retirees and disability payment recipients all rely on to make ends meet.
An 8.7 percent increase in SSDI and SSI benefits
Social Security administers two payment types to those who can’t work because of their health: SSI (Supplemental Security Income) and SSDI (Social Security Disability Insurance). As of January 1st, 2022, the benefits that recipients get every month from both of these services will go up by 8.7 percent.
There are also new income limits for SSDI to be aware of. If your earnings exceed this limit on substantial gainful activity (SGA), it will most of the time lead to the loss of your SSDI benefits. You will no longer be eligible if you make more money than this SGA cap allows.
How is the cost-of-living adjustment determined?
Social Security decided on this increase by following the trends in consumer pricing year over year in order to keep their benefits in pace with those prices. Social Security uses the National Average Wage Index to adjust the SGA cap.
For 2023, in most cases, the substantial gainful activity cap is set at $1,470 per month. In 2022, that limit was $1,350. Beneficiaries with vision impairment have a higher SGA cap for 2023 at $2,460.
Additionally, there are various work incentives that help encourage those with disabilities to find employment opportunities. One option is a trial work period, in which the recipient’s earnings won’t impact their benefits for any period of nine months over the course of five years.
Of all the people who are beneficiaries of Social Security, almost 12 percent of them get SSDI. In all, 7.7 million employees receive SSDI.
In some ways, SSDI works similarly to retirement benefits, in that the benefits are paid out of payroll tax revenue. This then goes into trust funds from Social Security. The individual’s earning record will determine the amount of benefits and eligibility.