Question of the Week: Social Security COLA
These questions are culled from phone calls, letters, faxes and e-mails sent to my Thousand Oaks, Solvang, and Washington offices. Each week I will add another question and answer.
Week of August 28, 2009
• Question: Will Social Security and Supplemental Security Income beneficiaries (SSI) receive a cost-of-living adjustment (COLA) this year?
→ Answer: To ensure the purchasing power of Social Security and SSI benefits are not eroded by inflation, these benefits are adjusted annually to reflect any increase in the cost of living based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) prepared by the Bureau of Labor Statistics (BLS).
Last year’s COLA was 5.8 percent. However, so far this year, the CPI-W has not increased. If the CPI-W continues to be flat for the year, Social Security and SSI recipients will not receive a COLA in January.
The problem for many seniors is that the CPI-W does not include medical costs, which are expected to increase by 5 percent this year. Health care costs constitute up to 14 percent of a senior’s average expenses.
For most seniors, the Medicare Part B premiums will not go up because increases in Part B premiums are limited to ensure that Social Security payments for lower income seniors do not decline from one year to the next. However, about 5 percent of seniors who have higher incomes will experience an increase in Part B premiums.
Premiums for seniors enrolled in Medicare Part D, the prescription drug program, will increase. Without a corresponding increase in Social Security, millions of seniors will have less money to pay for housing, food and other necessities.
If there is a adjustment, it would occur in January with an announcement before the end of the year.
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