No benefit increase for Social Security next year
Government: No benefit increase for Social Security next year
Robert Powell, Special to USA TODAY10:57 a.m. EDT October 15, 2015
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As expected, the Social Security Administration announced Thursday – for just the third time since the automatic adjustments were adopted in 1975 – that some 65 million Social Security recipients will not receive a cost-of-living adjustment (COLA) in 2016.
In addition to not seeing an increase in their benefits, the lack of a Social Security COLA will also cause a flap in the Medicare program because, by law, the cost of higher Medicare Part B premiums cannot be passed on to most beneficiaries when they do not get a raise in their Social Security benefits, according to the Center for Retirement Research.
According to Social Security’s “hold harmless” law, 70% of Medicare beneficiaries will pay the same Medicare Part B premium in 2016 as they did in 2015, $104.90.
But 30% of Medicare beneficiaries could see their Medicare Part B premium rise more than six times the rate of health-care inflation, unless Congress changes the hold harmless law or the Centers for Medicare and Medicaid Services (CMS) decides against the increase.
At the moment, most of the not-held-harmless Medicare beneficiaries will see their premium rise 52% to $159.30 per month ($318.60 for married couples). But individuals whose incomes exceed certain thresholds (about 5% of all Medicare beneficiaries), could see premiums rise to anywhere from $223.00 per month up to $509.80 (or $446 to $1,019.60 for married couples). What’s more, the Medicare Part B deductible will rise from Read Medicare Part B premiums to rise 52% for 7 million enrollees.
“The Part B premium for 2016 will be announced this fall, as it usually is,” says a CMS spokesperson. “The law does not give HHS the authority to extend the hold harmless provision to all Part B enrollees.” Over the past two years, CMS announced Part B premiums in October.
The culprit behind the lack of a COLA adjustment: Low inflation. The consumer price index for Urban Wage Earners and Clerical Workers (CPI-W) did not rise enough in the base period – the 12 months ended September 2015 – used to determine the COLA, according to a report by the Center for Retirement Research at Boston College.
The government said Thursday that inflation, as measured by the CPI-W, decreased 0.6% over the 12 months ending September. That means the CPI-W for the year ending September was below its level from the previous year. For Social Security beneficiaries to receive a COLA, the CPI-W must be above the previous year’s level. Social Security recipients did not receive COLA adjustments in 2010 and 2011 because of low inflation.
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