Senior Spectrum
Newspaper
June 2009
Our Other Publications
Generation Boomer
Magazine
on-line
Golden Pages
Directory
No Increase in
Social Security Benefits For 2010
For the first time in more than three decades, Social Security recipients will not receive any increase in the cost-of-living adjustment (COLA) in their benefits.
The absence of a COLA, calculated under a formula set by law, will be a shock to more than 50 million older Americans who receive Social Security, and who need the extra money. Reeling from plummeting home values, loss of nest egg investments and increasing health costs, more older Americans today are finding themselves having to make due with less and will continue to do so for at least the next few years. The Obama administration and the Congressional Budget Office forecast that Social Security beneficiaries will not receive any cost-of-living increase in 2010 or in 2011, but can expect a 1.4 percent COLA in 2012.
“Most seniors have never been through a year in which there was no Social Security COLA,” said David M. Certner, legislative counsel at AARP, the lobby for older Americans. Beneficiaries have received automatic COLAs every year since 1975. The increase this year was 5.8 percent. “If, as expected, there is no COLA in Social Security next year but premiums for drug coverage increase, millions of beneficiaries will see their Social Security checks reduced for the first time,” Certner said.
The COLA is intended to preserve the purchasing power of Social Security by increasing benefits to keep pace with consumer prices. In the last year, overall inflation has been low, largely because of the economic downturn and a decline in energy prices. A freeze in Social Security benefits would have major implications for Medicare beneficiaries because the COLA, in effect, puts a cap on premiums for Part B, which covers doctors' services.
Federal officials say no adjustment in the COLA for Social Security will have limited impact on about three-fourths of beneficiaries who will not see any change in their basic Part B premiums. But some beneficiaries (approximately one fourth of beneficiaries whose incomes are higher than $85,000 for individuals or $170,000 for couples) do not have this protection and could face substantial increases in Part B premiums. In addition, millions of beneficiaries could see higher premiums for drug coverage, provided under Medicare Part D.
The majority of Medicare beneficiaries pay a monthly Part B premium of $96.40. The Congressional Budget Office estimates that the basic premium will rise to $104.20 next year, and $120.20 in 2011 for those who are not protected under federal law.