Now Official Senior Citizens Will Not Get COLA
Increase for 2011; $250 Check, Maybe
Medicare law has
“hold harmless” provision protecting 70% on Social Security from paying
a higher Part B premium, which could cause many to receive less than
2010
Oct. 15, 2010 –
The Social Security Administration made the inevitable official this
morning – 58 million Americans will not get an automatic cost-of-living
adjustment (COLA) increase in 2011. The Social Security Act provides for
an increase in Social Security and Supplemental Security Income benefits
if inflation increases from the third quarter of the last year to the
third quarter of the current year.
Democrats in the
House of Representatives, led by Speaker Nancy Pelosi, have come out
strongly for the Senior Protection Act authored by Red. Elroy Pomeroy
(D-S.D.) that would authorize a one-time payment of $250 to seniors,
retired veterans and the disabled on Social Security. (See link to story
in sidebar box.)
“The lack of a
COLA in 2011 will not only freeze Social Security benefits again, but
will reduce many monthly checks as Part D prescription drug premiums and
other health care costs rise,” said Barbara B. Kennelly, President of
The National Committee to Preserve Social Security and Medicare.
“Neither the
current Congress nor the President created this COLA formula, in fact
it’s been in place since the 1970’s, but they can and should provide
short term relief. The National Committee urges Congress to act now to
address this problem by supporting legislation which will provide a
one-time $250 payment to seniors.”
Millions to
receive less in 2011
The combination
of rising Medicare premiums and no annual cost-of-living adjustment
(COLA) would reduce Social Security payments for about 23 million of the
nation's seniors in 2011, according to a report last month by The Senior
Citizens League. This figure represents two-thirds of the 37 million
seniors who receive Social Security benefits.
The estimate is
based on the group's recent survey of more than 2,400 seniors. Half of
them said they received lower Social Security benefits after Medicare
premium deductions this year, due to the lack of a COLA for the first
time in 35 years. The same situation is expected next year, because the
Social Security Trustees and Congressional Budget Office have predicted
that inflation will again remain too low to pay a COLA. Medicare
premiums, on the other hand, are expected to increase.
"Another year of
no COLA will put Social Security benefits through the wringer," said
Larry Hyland, chairman of The Senior Citizens League. "After paying
their Medicare health insurance premiums, seniors will have even less to
spend on other essentials. This will force many of them to fall below
the poverty line."
The automatic
increase in Social Security and SSI depends on an increase in the
Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)
from the third quarter of the last year a cost-of-living adjustment
(COLA) was determined to the third quarter of the current year. The
Bureau of Labor Statistics reports there is no increase in the CPI-W
from the third quarter of 2008, the last year a COLA was determined, to
the third quarter of 2010, therefore, under existing law, there can be
no COLA in 2011.
Other changes
that would normally take effect based on changes in the national average
wage index also will not take effect in January 2011. Since there is no
COLA, the statute also prohibits a change in the maximum amount of
earnings subject to the Social Security tax as well as the retirement
earnings test exempt amounts. These amounts will remain unchanged in
2011. The
attached fact
sheet provides more information on 2011 Social Security and
SSI changes.
Medicare
premiums for 2011 not announced
The Department
of Health and Human Services has not yet announced if there will be any
Medicare premium changes for 2011. Should there be an increase in the
Medicare Part B premium, the law contains a “hold harmless” provision
that protects more than 70 percent of Social Security beneficiaries from
paying a higher Part B premium, in order to avoid reducing their net
Social Security benefit.
Those not
protected include higher income beneficiaries subject to an
income-adjusted Part B premium and beneficiaries newly entitled to Part
B in 2011. In addition, almost 20 percent of beneficiaries have their
Medicare Part B premiums paid by state medical assistance programs and
thus will see no change in their Social Security benefit. The state
will be required to pay any Medicare Part B premium increase.
Information
about Medicare changes for 2011, when available, will be found at
www.Medicare.gov.
The Senior
Citizens League strongly supports legislation that would provide an
emergency COLA or guarantee a minimum average COLA to prevent the
erosion in Social Security benefits.
Kennelly of The
National Committee to Preserve Social Security and Medicare added, “For
millions of American seniors, Social Security has been the one stable
source of income they can count on during this economic recession.
That’s why older Americans are especially troubled by news they won’t
receive a cost of living adjustment for the second year in a row.
Despite a relatively low rate of inflation, seniors’ costs are going
up.
“Health care
costs especially are rising rapidly, and the elderly on fixed incomes
spend a significantly larger share of their income on health care.
While health care reform is a desperately needed first step to turn
that tide, the average senior can still expect to see 27% of his/her
Social Security check eaten away by Medicare premiums and out-of-pocket
costs next year.
Oct. 15, 2010 –
The Social Security Administration made the inevitable official this
morning – 58 million Americans will not get an automatic cost-of-living
adjustment (COLA) increase in 2011. The Social Security Act provides for
an increase in Social Security and Supplemental Security Income benefits
if inflation increases from the third quarter of the last year to the
third quarter of the current year.
Trust Funds exhausted in 2037, same as projected last year;
enter red ink in 2015
