The government said Thursday there will be no benefit
increase next year for millions of Social Security recipients, disabled
veterans and federal retirees. It's just the third time in 40 years that
payments will remain flat. It could be belt-tightening time for the
nation’s 65 million seniors. For just the third time in four decades, Social
Security recipients won't get an annual cost-of-living adjustment.
The announcement Thursday by the Social Security
Administration means many older Americans may see a reduced standard of
living, particularly 30% of Medicare beneficiaries — an estimated 17
million Americans — who could see their Part B premium and deductible rise 52%
because of provisions in the Social Security law. The decision also introduces
a $12 billion complication into already contentious budget talks between
Congress and the White House.
The price tag for Congress to protect seniors from the
higher Part B premiums and deductibles could be around $10 billion. Plus,
states are likely to ask Congress for $2 billion to cover the extra cost of
Part B premiums for the 10 million dual Medicare-Medicaid beneficiaries
whose premiums are now paid by state Medicaid programs.
Seniors won’t get a cost of living adjustment, known as a
COLA, in 2016 because such increases are tied to the general rate of inflation
— no inflation, no increase. In the past year, prices for the goods and
services used to calculate inflation fell, mostly due to a dip in fuel
While prices on paper may have dropped, experts say the
actual cost of living for Social Security beneficiaries is rising and their
quality of life is falling. Social Security recipients have lost nearly a
fourth of their buying power over the last 15 years, according to the Senior
Citizens League. Consider: The cost of housing, often a retiree’s greatest
expense, rose 44% since 2000; heating oil, 159%; eggs, 117%; and gasoline, 76%.
In contrast, Social Security COLAs averaged just 2.2% per year since 2000, or
just 36.3% overall.
The difference will be especially pronounced for retirees
who are spending more on medical care, because that expenditure group had the
largest inflation rate over the last year, Blanchett said. “The impact isn’t
huge, but it will likely mean retirees will have to cut back a little bit going
into 2016,” he said. In the meanwhile, seniors can hope for the best as they
prepare for the worst. Lawmakers in Congress have introduced a bill to protect
some 17 million seniors from the Medicare Part B premium increase. And the Department
of Health and Human Services can decide against increasing the Medicare
Part B premiums and deductibles.
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