Another Three Years Of Extremely Low COLAs? SS Checks Of Millions May Shrink

Another Three Years Of Extremely Low COLAs? SS Checks Of Millions May Shrink

Alexandria, VA (March 28, 2012)    Benefits may fall for about 5.7 million  Social Security beneficiaries next year, according to a new analysis released by The Senior Citizens League (TSCL), one of the nation's largest nonpartisan seniors groups.  The reduction would be caused when rising Medicare Part B and other Medicare premiums increase more than the annual cost-of-living adjustment (COLA) would increase benefits.

In its new March estimates for Social Security, the nonpartisan Congressional Budget Office (CBO) forecast that minimal inflation would boost Social Security by no more than 1.3% in 2013, and 1.4% in 2014 and 2015.   At the same time, Medicare Part B premiums are expected to rise at a much faster rate.  Medicare’s actuaries estimate that Medicare Part B premiums will increase almost 11%, about $10.60 more per month in 2013 from today’s premium of $99.90.

This would impact the amount beneficiaries receive in Social Security because Part B premiums are automatically deducted from the payments of most people.  According to TSCL’s new analysis, if the CBO’s inflation estimates prove correct, Medicare Part B premiums would completely offset the annual cost-of-living adjustment (COLA) of people receiving low benefits of $665 per month or less (prior to deductions for Medicare Part B premiums).  The analysis found that more than one out of ten beneficiaries, about 5.7 million in all, would be at risk of being affected.

Should such a situation occur, rising Part B premiums would trigger a special provision of law known as the “hold harmless” provision.  The hold harmless provision was triggered recently in 2010 and 2011 when there wasn’t any COLA.  Under the provision, if the increase in the monthly Medicare Part B premium is more than the amount of an individual’s monthly COLA increase, then the Part B premium will be adjusted in order to prevent reductions in benefits from one year to the next.  In 2010 and 2011, when no COLA was payable, the benefits of about three- quarters of beneficiaries were protected from reduction as Part B premiums rose.

“While the hold harmless provision is helpful in protecting benefits from the rise of Part B premiums, it isn’t fail- safe,” says TSCL Chairman, Larry Hyland.  “The provision does not extend to rising Part D or Medicare Advantage plan premiums.  Any increase in those premiums may reduce benefits if the COLA is not high enough to offset them,” Hyland notes.  In TSCL’s annual 2011 Senior Survey, 44% of respondents said their Social Security benefits were lower in 2011 than in 2010, after deducting all Medicare premiums.

TSCL supports strengthening the hold harmless provision to protect seniors and the disabled from benefit reductions when Part D and Medicare Advantage premiums increase more than their COLAs.  TSCL is working for legislation that provides seniors with a more fair COLA that better reflects the portion of income they spend on healthcare costs.

To sign a petition and learn more about COLA and rising Medicare costs, visit TSCL’s website at

For more information about Social Security and Medicare benefits, keeping costs low while living in retirement, get a free copy of The Social Security & Medicare Advisor.  Send a self-addressed stamped envelope and $1 for shipping and handling to: The Senior Citizens League, 1001 N. Fairfax St., Suite 101, Alexandria, VA 22314.

With over million supporters, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Located just outside Washington, D.C., its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Please visit