Ask the Advisor: September/October 2016

Ask the Advisor: September/October 2016

Would a Higher Cost-of-Living-Adjustment in Social Security Make Me Ineligible for Medicaid?

Q:  I recently read that if retirees got higher cost-of-living-adjustments some low-income people would lose eligibility for Medicaid, food stamps, and other benefits.  Would using a senior consumer price index to determine the annual raise really do this?

A:  It would be unlikely for the vast majority of low-income beneficiaries.  That’s because state and federal poverty guidelines used to determine low-income are also adjusted annually for inflation, and the income thresholds would rise roughly in tandem with Social Security benefits.  Currently the federal poverty level is $11,880 for individuals, and $16,020 for a family of two, with slightly higher amounts for Alaska and Hawaii.

The income thresholds for the federal poverty levels are adjusted using a somewhat faster growing index than the one used to determine the COLA.  Unlike the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which does not survey the costs of people over the age of 62, the Consumer Price Index for All Urban Consumers CPI-U includes the spending patterns of both younger workers and people over the age of 62.  Consequently the federal poverty limits increase somewhat faster than the CPI-W and today’s COLAs.  The 2016 poverty levels reflect a 0.1% increase over 2015 rather than zero like the Social Security COLA.

How would this compare with the “senior” CPI, the Consumer Price Index for the Elderly (CPI-E)?  Estimates for TSCL indicate that if the CPI-E were to be used to determine the COLA for 2017 the COLA would be 1.7% — 1.1% higher than COLAs under the CPI-W, but federal poverty levels will rise as well.

The assertion that many lower - income beneficiaries would lose benefits due to higher COLAs simply isn’t the case, but is rather another example of twisted partisan rhetoric.  Voters would be far better served by lawmakers who are more focused on solving problems of the majority of people than spreading misinformation to protect the tax breaks of the nation’s wealthiest workers.

Want to join the effort for an Emergency COLA?  Sign a petition today!