12 Ways Seniors Would Get Less, Pay More
Efforts are quietly underway to lay the groundwork for a far-reaching fiscal deal that involves Social Security cost-of-living adjustments (COLAs) and Medicare benefits. White House officials and Senate Republicans have met in a series of private sessions in recent months. In his fiscal year 2014 budget, President Obama proposed reducing the growth in COLAs as well as raising Medicare premiums, reducing benefits of higher income seniors and increasing the Medicare eligibility age. Everything is still on the table, the pressure point being the debt limit. The government is expected to hit the debt limit ceiling – the statutory borrowing limit—sometime this fall.
Most seniors are aware of the impact of the consumer price index (CPI) on COLAs. But switching to the more slowly growing "chained" CPI, if applied government-wide, would be far more reaching than Social Security cuts alone. In every aspect where applied, seniors would receive less in benefits and pay more in higher taxes. The following chart illustrates:
The Chained CPI — How Seniors Get Less And Pay More
|Program||What Chained CPI Affects||Impact on Seniors|
|Income taxes||Tax brackets, personal exemptions, deductions||Higher taxes as tax brackets, exemptions, and deductions rise more slowly.|
|Social Security — retirement, survivors, disability benefits||COLAs||Lower lifetime benefits –Seniors with average benefits of $14,400 in 2013 would lose an estimated $27,500 over a 30-year retirement.|
|Medicare||Some benefits indexed annually||Less generous coverage such as, lower Part D initial coverage amounts leaving seniors at risk of higher out-of-pocket costs due to hitting doughnut hole.|
|Supplemental Security Income (SSI)||COLAs||Lower SSI benefits over the period they are received.|
|Supplemental Nutritional Assistance Program (SNAP, formerly food stamps)||Benefit amount, income eligibility guidelines||Food stamp benefits would grow more slowly, fewer low-income seniors would qualify.|
|Civil Service and Federal Employees Retirement Systems||COLAs||Lower lifetime benefits.|
|Military Retirement System||COLAs||Lower lifetime benefits.|
|Military Dependency and Indemnity Compensation||COLAs||Lower benefits for survivors.|
|Veterans' Disability Compensation||COLAs||Lower benefits.|
|Veterans' Pensions||COLAs||Lower lifetime pension payouts.|
|Railroad Retirement, Tier 1, Tier II benefits||COLAs||Lower lifetime benefits|
|Medicaid||Eligibility for long-term care services and supports
|Fewer low-income seniors would qualify for nursing home care, or would have longer "spend down" waiting periods.|
To learn how much COLA cuts would cost you, try TSCL's Chained COLA calculator.
Sources: "Senate Republicans, White House Officials Meet Privately on Fiscal Deal," Paul M. Krawzak, CQ Roll Call, June 6, 2013. "Inflation – Indexing Elements in Federal Entitlement Programs," Dawn Nuschler, Congressional Research Service, April 24, 2013.