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Lower gas prices means no Social Security increase next year
Oct 11, 8:15 AM (ET)
By STEPHEN OHLEMACHER
WASHINGTON (AP) — For just the third time in 40 years, millions of Social Security recipients, disabled veterans and federal retirees can expect no increase in benefits next year, unwelcome news for more than one-fifth of the nation's population.
They can blame low gas prices.
By law, the annual cost-of-living adjustment, or COLA, is based on a government measure of inflation, which is being dragged down by lower prices at the pump.
The government is scheduled to announce the COLA — or lack of one — on Thursday, when it releases the Consumer Price Index for September. Inflation has been so low this year that economists say there is little chance the September numbers will produce a benefit increase for next year.
Prices actually have dropped from a year ago, according to the inflation measure used for the COLA.
"It's a very high probability that it will be zero," said economist Polina Vlasenko, a research fellow at the American Institute for Economic Research. "Other prices — other than energy — would have to jump. It would have to be a very sizable increase that would be visible, and I don't think that's happened."
Congress enacted automatic increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits. Since then, increases have averaged 4 percent a year.
Only twice before, in 2010 and 2011, have there been no increases.
In all, the COLA affects payments to more than 70 million Americans.
Almost 60 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,224.
The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security.
Carol Mead of Montrose, Pennsylvania, said she and her husband were counting on Social Security COLA to help them with their finances.
"My husband is working just so we can pay our bills," said Mead, a retired land-use administrator. "He's 70 years old, and he's still working in a stone quarry. He's told me a number of times that he thinks he's going to have to work until the day he dies."
More bad news: The lack of a COLA means that older people could face higher health care costs.
Most have their Medicare Part B premiums for outpatient care deducted directly from their Social Security payments, and the annual cost-of-living increase is usually enough to cover any rise in premiums. When that doesn't happen, a long-standing federal "hold harmless" law protects the majority of beneficiaries from having their Social Security payments reduced.
But that leaves about 30 percent of Medicare beneficiaries on the hook for a premium increase that otherwise would be spread among all. Those who would pay the higher premiums include 2.8 million new beneficiaries, 1.6 million whose premiums aren't deducted from their Social Security payments and 3.1 million people with higher incomes.
Their premiums could jump by about $54 a month; more for those with higher incomes.
States also would feel a budget impact because they pay part of the Medicare premium for about 10 million low-income beneficiaries.
All beneficiaries would see their Part B annual deductible for outpatient care jump by $76, to an estimated $223. The deductible is the annual amount patients pay before Medicare kicks in.
"This would affect all beneficiaries," said Tricia Neuman of the nonpartisan Kaiser Family Foundation. "This kind of an increase is unprecedented."
Senate Democrats have introduced legislation that would freeze Medicare's Part B premium and deductible for 2016, but its prospects are uncertain.
White House spokeswoman Katie Hill said, "We share the goal of keeping Medicare's premiums affordable, are exploring all options."
By law, the cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.
The COLA is calculated by comparing consumer prices in July, August and September each year with prices in the same three months from the previous year. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.
The numbers for July and August show that, overall, consumer prices have fallen since last year. Fuel prices are down by 23 percent from a year ago, according to the August inflation report. But prices for some other goods and services, such as health care and housing, are up.
Advocates argue that the government's measure of inflation doesn't accurately reflect price increases in the goods and services that older Americans use.
"The COLA is determined by the buying power of younger working adults," said Mary Johnson of The Senior Citizens League.
Many advocates for seniors want Congress to adopt an experimental price index that seeks to capture the inflation experienced by Americans 62 and older. The Social Security Administration estimates it would increase the annual COLA by an average of 0.2 percentage points — which still might not be enough to generate a COLA for next year.
Lee Marshall of Greenville, California, said the current inflation index isn't good enough.
"They have a formula that they use that doesn't reflect the actual cost of living," said Marshall, 68, a retired laborer and casino dealer. "Just because the price of gas is going down, that doesn't mean anything."
---
Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.
---
By STEPHEN OHLEMACHER
WASHINGTON (AP) — For just the third time in 40 years, millions of Social Security recipients, disabled veterans and federal retirees can expect no increase in benefits next year, unwelcome news for more than one-fifth of the nation's population.
They can blame low gas prices.
By law, the annual cost-of-living adjustment, or COLA, is based on a government measure of inflation, which is being dragged down by lower prices at the pump.
The government is scheduled to announce the COLA — or lack of one — on Thursday, when it releases the Consumer Price Index for September. Inflation has been so low this year that economists say there is little chance the September numbers will produce a benefit increase for next year.
Prices actually have dropped from a year ago, according to the inflation measure used for the COLA.
"It's a very high probability that it will be zero," said economist Polina Vlasenko, a research fellow at the American Institute for Economic Research. "Other prices — other than energy — would have to jump. It would have to be a very sizable increase that would be visible, and I don't think that's happened."
Congress enacted automatic increases for Social Security beneficiaries in 1975, when inflation was high and there was a lot of pressure to regularly raise benefits. Since then, increases have averaged 4 percent a year.
Only twice before, in 2010 and 2011, have there been no increases.
In all, the COLA affects payments to more than 70 million Americans.
Almost 60 million retirees, disabled workers, spouses and children get Social Security benefits. The average monthly payment is $1,224.
The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security.
Carol Mead of Montrose, Pennsylvania, said she and her husband were counting on Social Security COLA to help them with their finances.
"My husband is working just so we can pay our bills," said Mead, a retired land-use administrator. "He's 70 years old, and he's still working in a stone quarry. He's told me a number of times that he thinks he's going to have to work until the day he dies."
More bad news: The lack of a COLA means that older people could face higher health care costs.
Most have their Medicare Part B premiums for outpatient care deducted directly from their Social Security payments, and the annual cost-of-living increase is usually enough to cover any rise in premiums. When that doesn't happen, a long-standing federal "hold harmless" law protects the majority of beneficiaries from having their Social Security payments reduced.
But that leaves about 30 percent of Medicare beneficiaries on the hook for a premium increase that otherwise would be spread among all. Those who would pay the higher premiums include 2.8 million new beneficiaries, 1.6 million whose premiums aren't deducted from their Social Security payments and 3.1 million people with higher incomes.
Their premiums could jump by about $54 a month; more for those with higher incomes.
States also would feel a budget impact because they pay part of the Medicare premium for about 10 million low-income beneficiaries.
All beneficiaries would see their Part B annual deductible for outpatient care jump by $76, to an estimated $223. The deductible is the annual amount patients pay before Medicare kicks in.
"This would affect all beneficiaries," said Tricia Neuman of the nonpartisan Kaiser Family Foundation. "This kind of an increase is unprecedented."
Senate Democrats have introduced legislation that would freeze Medicare's Part B premium and deductible for 2016, but its prospects are uncertain.
White House spokeswoman Katie Hill said, "We share the goal of keeping Medicare's premiums affordable, are exploring all options."
By law, the cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.
The COLA is calculated by comparing consumer prices in July, August and September each year with prices in the same three months from the previous year. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.
The numbers for July and August show that, overall, consumer prices have fallen since last year. Fuel prices are down by 23 percent from a year ago, according to the August inflation report. But prices for some other goods and services, such as health care and housing, are up.
Advocates argue that the government's measure of inflation doesn't accurately reflect price increases in the goods and services that older Americans use.
"The COLA is determined by the buying power of younger working adults," said Mary Johnson of The Senior Citizens League.
Many advocates for seniors want Congress to adopt an experimental price index that seeks to capture the inflation experienced by Americans 62 and older. The Social Security Administration estimates it would increase the annual COLA by an average of 0.2 percentage points — which still might not be enough to generate a COLA for next year.
Lee Marshall of Greenville, California, said the current inflation index isn't good enough.
"They have a formula that they use that doesn't reflect the actual cost of living," said Marshall, 68, a retired laborer and casino dealer. "Just because the price of gas is going down, that doesn't mean anything."
---
Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.
---
This is so frustrating, food is out of sight for us. Even just buying a gallon of milk is close to $6. We don't drive either so it doesn't seem fair. Of course who ever said life was fair I guess we will stock up on basics, buy the dented cans etc, to see us through. Thanks for sharing this information.
It says the same thing as the link I posted, just worded a bit differently:
"A federal provision called “Hold Harmless” prevents that hardship for some 70 percent of Part B enrollees, blocking any upticks in those premiums from diminishing Social Security benefits.
But the protective measure applies largely to Medicare beneficiaries whose income is less than $85,000 a year — or $170,000 for a couple — and who are currently paying Part B premiums through deductions from their Social Security payments, according to the nonprofit Center for Medicare Advocacy in Willimantic, Conn."
I don't fit into the $85,000-$170,000 category, so it's not likely that the increases are going to affect me unless there's an increase in my supplement premium, which would be due to an increase in the deductible, which is still a "could be", at this point.
"A federal provision called “Hold Harmless” prevents that hardship for some 70 percent of Part B enrollees, blocking any upticks in those premiums from diminishing Social Security benefits.
But the protective measure applies largely to Medicare beneficiaries whose income is less than $85,000 a year — or $170,000 for a couple — and who are currently paying Part B premiums through deductions from their Social Security payments, according to the nonprofit Center for Medicare Advocacy in Willimantic, Conn."
I don't fit into the $85,000-$170,000 category, so it's not likely that the increases are going to affect me unless there's an increase in my supplement premium, which would be due to an increase in the deductible, which is still a "could be", at this point.
It's based on the rate of inflation for the months of July, Aug and Sep of each year... For this year, as you can see, gas prices kept inflation at a low, but as soon as we got into October, we saw an increase of $0.15... Coincidence? I doubt it...
http://www.post-gazette.com/business/healthcare-business/2015/10/11/Battle-begins-against-possible-rise-in-Medicare-premiums/stories/201510110083
This is one of the places I found the increase - it does say possible. I'm searching for the other article.
This is one of the places I found the increase - it does say possible. I'm searching for the other article.
You mention that these years of no cost of living increases are all under this Administration.
My question is who actually makes this decision ? Is it a congressional committee or ???
My question is who actually makes this decision ? Is it a congressional committee or ???
I wasn't implying that you were being insensitive to others, since we both know that Medicare changes do apply to everyone.
"if your Medicare premiums are withheld from your Social Security benefits and Social Security does not have a cost-of-living adjustment (COLA) for 2016 because of low inflation, you will continue to pay $104.90 per month for Part B. That’s because the “hold harmless” provision prohibits Social Security benefits from being reduced because of an increase in Medicare premiums. Medicare cost increases are generally covered by the Social Security COLA.
Individuals with annual incomes over $85,000, or $170,000 for joint filers, who are not protected by the hold-harmless provision, will pay the higher base amount plus a high-income surcharge. Total monthly premiums for them could range from $223.00 to $509.80 per month, depending on the size of their income. (People who qualify for both Medicare and Medicaid would not be protected by the hold-harmless provision, either, but their state Medicaid program would pay the extra premium.)"
http://www.kiplinger.com/article/insurance/T027-C001-S003-who-has-to-pay-the-hike-in-medicare-premiums.html#A8revpZ7ejEPsX3e.99
I can't find anything that mentions about an increase in the Part B deductible and I haven't received anything, personally, to confirm that. Nor have I received notice that my supplemental insurance premium will go up, though I have received notice that my Rx plan premium will increase by $6/mo...
According to my insurance agent, things are to remain relatively stable for 2016, but we're really supposed to be taking a hit in 2017...
"if your Medicare premiums are withheld from your Social Security benefits and Social Security does not have a cost-of-living adjustment (COLA) for 2016 because of low inflation, you will continue to pay $104.90 per month for Part B. That’s because the “hold harmless” provision prohibits Social Security benefits from being reduced because of an increase in Medicare premiums. Medicare cost increases are generally covered by the Social Security COLA.
Individuals with annual incomes over $85,000, or $170,000 for joint filers, who are not protected by the hold-harmless provision, will pay the higher base amount plus a high-income surcharge. Total monthly premiums for them could range from $223.00 to $509.80 per month, depending on the size of their income. (People who qualify for both Medicare and Medicaid would not be protected by the hold-harmless provision, either, but their state Medicaid program would pay the extra premium.)"
http://www.kiplinger.com/article/insurance/T027-C001-S003-who-has-to-pay-the-hike-in-medicare-premiums.html#A8revpZ7ejEPsX3e.99
I can't find anything that mentions about an increase in the Part B deductible and I haven't received anything, personally, to confirm that. Nor have I received notice that my supplemental insurance premium will go up, though I have received notice that my Rx plan premium will increase by $6/mo...
According to my insurance agent, things are to remain relatively stable for 2016, but we're really supposed to be taking a hit in 2017...
I agree Barb that this effects more than just my retired Aunt. I wasn't trying to be insensitive to others - it applies to me also.
I haven't been able to locate the info that assures us Medicare Premiums will not increase in 2016. What I have found is that the yearly deductibles climb from $147 to $223 under Part B in 2016.
I'm also reading that our Medicare Supplement Plans and Advantage Plans will see premiums rise in 2016.
Yup, lower gas prices certainly makes up for all the increases - not!
I haven't been able to locate the info that assures us Medicare Premiums will not increase in 2016. What I have found is that the yearly deductibles climb from $147 to $223 under Part B in 2016.
I'm also reading that our Medicare Supplement Plans and Advantage Plans will see premiums rise in 2016.
Yup, lower gas prices certainly makes up for all the increases - not!
Many private pensions are in far worse shape than social security.
When pension funds go empty, all bets are off
Some 407,000 Teamsters are learning a painful lesson: Their private-sector pensions aren’t as safe as they once thought.............
paying out $3.46 in benefits for every $1 it takes in......................
http://nypost.com/2015/10/10/when-pension-funds-go-empty-all-bets-are-off/
When pension funds go empty, all bets are off
Some 407,000 Teamsters are learning a painful lesson: Their private-sector pensions aren’t as safe as they once thought.............
paying out $3.46 in benefits for every $1 it takes in......................
http://nypost.com/2015/10/10/when-pension-funds-go-empty-all-bets-are-off/
This is only the third time in the past 40 years that there hasn't been a Cost of Living Adjustment for Social Security... Those years were 2010, 2011 and now 2016... All under one administration.
This doesn't make sense. Many of the elderly no longer drive but are still affected by rising costs of, food, housing, etc.
Congress needs to get some compassion !
Congress needs to get some compassion !
None of us get an increase and many of gave more than we get... the whole thing is a sham anyway... if they didn't blame the lack of increase on gas prices, they'd be blaming it on something else.
I feel for people who have nothing but SS to live on... costs continue to go up, but not the income, yet they want someone who slings burgers at McDonald's to make $15/hr...
One good thing is Medicare cost will not go up for most...at least for 2016; but wait until 2017, then the flood gates are supposed to open...
I feel for people who have nothing but SS to live on... costs continue to go up, but not the income, yet they want someone who slings burgers at McDonald's to make $15/hr...
One good thing is Medicare cost will not go up for most...at least for 2016; but wait until 2017, then the flood gates are supposed to open...
My 79 yr old Aunt - a widow that lives solely on her small SS income - will receive no increase. She worked hard her entire life as a nurse. She gave more than she got.
She was just notified of a $45 rent increase. Her utilities increased over the past year and food prices rose.
She doesn't see a physician because it "costs too much."
She doesn't drive so stick the lower gas prices.
Where she'll come up with the rent increase and possible Medicare cost is beyond me. I'm so proud of our government!! Not!
She was just notified of a $45 rent increase. Her utilities increased over the past year and food prices rose.
She doesn't see a physician because it "costs too much."
She doesn't drive so stick the lower gas prices.
Where she'll come up with the rent increase and possible Medicare cost is beyond me. I'm so proud of our government!! Not!
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