Chained CPI Affects More Than Social
Security COLA, Seniors Would Get Less, Pay More
The Seniors Citizens League (TSCL)
continues to be an unrelenting fighter to preserve Social Security and
the cost-of-living allowance now in place - COLA for 2014 should be
announced this month
Tucker Sutherland, editor
2, 2013 – While most of the media attention on the U.S. government is
focused on the Republican efforts to defund the Affordable Care Act, and
the government shutdown this has caused, many seniors are worrying more
about their Social Security and the cost-of-living allowance (COLA)
increase that is normally announced in October. And, too, there is
plenty of concern about a proposal to change the way the COLA is
determined – using a different consumer price index – that most experts
predict will significantly decrease these increases.
The Seniors Citizens League (TSCL),
which claims to be one of the nation’s largest nonpartisan seniors
groups, has probably been the most active in fighting to preserve Social
Security and the current method of determining the COLA.
“Most seniors are aware of the
impact of the consumer price index (CPI) on their cost-of-living
adjustments (COLAs). But a widely-debated deficit reduction proposal
that would switch to the more slowly-growing ‘chained’ CPI to determine
COLAs would have far greater impact than Social Security cuts alone if
applied government-wide, warns TSCL.
President Obama included the
proposal in his fiscal year 2014 budget plan, and it has won support
among Congressional proponents on both sides of the aisle, according to
“Chaining the COLA is getting so
much attention because it’s a deficit cutter’s magic bullet,’” says
Larry Hyland, Chairman of TSCL. The Congressional Budget Office has
estimated that the proposal would cut federal spending by $216 billion
and increase revenues by $123.7 billion - reducing the deficit by $339.8
billion in the first ten years alone.
The group points out that in
addition to Social Security, beneficiaries of the Supplemental Security
Income program (SSI), military retirement and veterans programs, Rail
Road Retirement, civil service and federal workers programs - more than
62.5 million beneficiaries in all— would bear the brunt of the cuts by
receiving lower benefits.
But in addition to the cut in
income, TSCL says the change would also increase seniors’ costs.
• Some Medicare coverage would
become less generous, such as more slowly-growing Part D coverage
• Fewer low-income seniors would
qualify for Medicaid, or such seniors would have to wait longer to
qualify. This could include nursing home stays as the income limits
rise more slowly.
• Fewer low-income seniors would
qualify for food stamps, and the food stamp benefit would grow more
• Seniors would pay more in
taxes as tax brackets, exemptions, and deductions, which are indexed to
the CPI, rise more slowly.
TSCL has compiled a chart, “12
Ways Seniors Would Get Less, Pay More”, which illustrates these
effects. (See chart below news report)
“Efforts have been quietly underway
for months to lay the groundwork for a far-reaching fiscal deal that
involves Social Security cost-of-living adjustments (COLAs) and Medicare
benefits,” Hyland notes.
“It’s important for older Americans
to realize that switching to the “chained” CPI is no single, or small,
one-time cut. It’s a permanent annual cut across multiple senior
programs that grows bigger over time the longer one lives,” Hyland
states. “In the meantime senior taxpayers would pay more in taxes,” he
TSCL is fighting “Chaining the
COLA” and higher Medicare costs, and encourages seniors to attend town
hall meetings and to contact their Members of Congress. To learn how
much COLA cuts would cost you, try
TSCL’s Chained COLA calculator. To subscribe to TSCL’s newsletter
The Social Security and Medicare Advisor, visit
Ways Seniors Would Get Less, Pay More
Efforts are quietly
underway to lay the groundwork for a far-reaching fiscal deal
that involves Social Security cost-of-living adjustments (COLAs)
and Medicare benefits. White House officials and Senate
Republicans have met in a series of private sessions in recent
In his fiscal year 2014
budget, President Obama proposed reducing the growth in COLAs as
well as raising Medicare premiums, reducing benefits of higher
income seniors and increasing the Medicare eligibility age.
Everything is still on the table, the pressure point being the
debt limit. The government is expected to hit the debt limit
ceiling – the statutory borrowing limit—sometime this fall.
Most seniors are aware of
the impact of the consumer price index (CPI) on COLAs. But
switching to the more slowly growing “chained” CPI, if applied
government-wide, would be far more reaching than Social Security
cuts alone. In every aspect where applied, seniors would receive
less in benefits and pay more in higher taxes. The following
Chained CPI — How Seniors Get Less And Pay More
Chained CPI Affects
Impact on Seniors
brackets, personal exemptions, deductions
taxes as tax brackets, exemptions, and deductions
rise more slowly.
Security — retirement, survivors, disability
lifetime benefits –Seniors with average benefits of
$14,400 in 2013 would lose an estimated $27,500 over
a 30-year retirement.
benefits indexed annually
generous coverage such as, lower Part D initial
coverage amounts leaving seniors at risk of higher
out-of-pocket costs due to hitting doughnut hole.
Supplemental Security Income (SSI)
SSI benefits over the period they are received.
Supplemental Nutritional Assistance Program (SNAP,
formerly food stamps)
amount, income eligibility guidelines
stamp benefits would grow more slowly, fewer
low-income seniors would qualify.
Service and Federal Employees Retirement Systems
Dependency and Indemnity Compensation
benefits for survivors.
Veterans’ Disability Compensation
lifetime pension payouts.
Retirement, Tier 1, Tier II benefits
Eligibility for long-term care services and
low-income seniors would qualify for nursing home
care, or would have longer “spend down” waiting
Republicans, White House Officials Meet Privately on Fiscal
Deal,” Paul M. Krawzak, CQ Roll Call, June 6, 2013.
“Inflation – Indexing Elements in Federal Entitlement Programs,”
Dawn Nuschler, Congressional Research Service, April 24, 2013.
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