TSCL Fights Plan To Cut COLAs
For the first time in two years, seniors will get a cost-of-living adjustment (COLA) starting in January. But whether they see a boost in their bank statements is another matter. The Social Security Administration recently announced the COLA will increase benefits by 3.6%. But rising Medicare Part B, drug plan and health plan premiums are expected to offset much if not all of the COLA for most beneficiaries.
The annual boost will increase average monthly benefits of $1,082 about $39. But most adults 65 and older, and younger disabled beneficiaries will have a larger portion of Social Security benefits deducted from their monthly payment to cover rising Medicare Part B premiums in 2012.
Although new enrollees in Part B paid a monthly premium of $115.40 in 2011, most people who were enrolled in Medicare prior to 2010 have had their Part B premium frozen at $96.40 for the past two years. A hold harmless provision of law was triggered when inflation was too low to pay a COLA in 2010 and 2011. Under the provision, the government adjusts the Part B premium amount that’s deducted from Social Security benefits when Part B increases more than an individual’s COLA in order to prevent a reduction in Social Security benefits from one year to the next.
Reductions in Social Security benefits still occurred for millions of seniors, nevertheless, who have Part D or Medicare Advantage plan premiums deducted from their Social Security benefits. The hold harmless provision does not apply to Part D or Medicare Advantage plan premiums. Now that there’s a COLA increase, most people will see Part B premium increases.
The COLA follows a surge in inflation over the past 12 months that occurred even while seniors had no COLA increase to help them weather the storm of rising costs. But the problem of an insufficient COLA is not new. According to an annual senior cost survey performed for TSCL, seniors lost 32 percent of the buying power of their Social Security benefits since 2000.
The 2012 COLA is sorely needed and welcome. But “seniors should remain vigilant,” warns TSCL Executive Director, Shannon Benton. A special Congressional Joint Committee on Deficit Reduction is working on a plan to reduce the federal deficit by at least $1.2 billion. Most of the major deficit reduction plans considered over the past year would reduce the growth in COLAs. Congress may consider major legislation that would reduce COLAs by the end of this year.
What you can do: Contact your Members of Congress and tell them NO to COLA cuts! For help with the contact name and address of your Members of Congress, call TSCL toll free at 800-333-8725. To send an email click here.