Social Security Announces COLA for 2017
- Author: Zachary Reyes Oct 31, 2016,
Oct 31, 2016, 7:45
Paul Rosa, a 67-year-old retiree in Charles Town, West Virginia, said he estimates his benefit increase might be enough for him to treat himself to one meatball sub a month from Subway, which costs about $3.50 near him when it's on special.
"Over the past eight years, the current COLA formula has led to average increases of just over 1 percent, with three of those years seeing no increase at all", the National Committee to Preserve Social Security & Medicare said.
Graphic shows annual Social Security cost-of-living adjustments. According to the law, the COLA's basis is the consumer prices founded on a government measure. About 12 million workers will pay more in taxes because of the change, the administration estimates. For the majority of seniors, this means the hike in premiums will not be more than the cost-of-living increase but it could eat up any increase in benefits.
Such individuals will see big premium increases because the government's total costs for Part B, which covers doctor visits and other outpatient services, continue to climb.
Beneficiary checks can be higher than the new average depending upon their earning history and how old they were when they began collecting benefits.
Nearly a third of Medicare's 56 million beneficiaries could see their premiums jump 22% next year, according to the Medicare Trustees Report, putting the cost at an estimated $149 per month. These trends could benefit some Social Security recipients, while burdening others, estimates AIER. The adjustment 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. This could force millions of people, who rely on Social Security, to accept a lower standard of living.
Corrections & clarifications: A previous version of the cost-of-living chart accompanying this story incorrectly listed percentage changes. A member of the Senior Citizens League, Mary Johnson says that many people are digging through their retirement savings at a faster rate.
The COLA is calculated using the average CPI-W for July, August and September.
If prices go up, benefits go up. If prices remained flat or even fell, there is no COLA.
The September inflation report showed that gasoline prices past year fell by 6 percent. The study warns that enrollees' total out-of-pocket spending for costly prescription drugs could be much higher, including mounting deductibles, cost-sharing and whether enrollees' drugs are covered by their plan. Independent analysts expect an increase of 0.5%.
Fed monetary policymakers want to see prices rising 2 percent annually.
Retirees have grown used to seeing no or little-to-no pay increases over the past several decades as inflation has stayed low.
"CMS now does not perform post-payment edits to detect and recoup improper payments, and CMS plans to use data that are suitable for processing Social Security payments but not Medicare payments", the report continued.