There’s A Simple Way to Prevent a Medicare Premium Spike —
Provide An Emergency COLA
By Shannon Benton, Executive Director
Once again, retirees are likely to receive an annual cost-of-living adjustment (COLA) that comes nowhere near to reflecting reality. Our estimate of a 1.3% COLA in 2021 doesn’t have to happen. Congress has a choice, and it can provide a more adequate COLA for Social Security recipients in 2021.
Your elected lawmakers can strengthen the COLA and strengthen your Social Security income in a way that will permanently boost your benefits, by providing a 2.5% emergency COLA. By taking this one action, Congress would completely eliminate the need for extreme Medicare Part B premium spikes in excess of the 12 % increase we are already likely to see, in 2021. With an adequate COLA, we could avoid the necessity of extra Part B premium surcharges like the ones paid in 2017 and 2018.
Our nation needs to think differently about retirement security. When a zero COLA was announced for 2016, the majority in Congress didn’t focus on constituents’ needs by boosting Social Security benefits. Instead, it focused on finding the Medicare Part B premium funding that was lost when about 70% of beneficiaries were protected from paying increased premiums by the Social Security hold harmless provision.
Members of Congress enacted legislation that reduced the subsequent Medicare Part B premium increase for 2016, but it was still a stiff 16% increase — a level of increase we may see again in 2021. And in 2021 they required an extra $3 per month “repayment” that was tacked onto Medicare Part B premiums in subsequent years when COLAs started again. Beneficiaries saw no growth in their net Social Security benefits in 2016, again in 2017 when the COLA was just 0.03%, and about half of all beneficiaries were then once again affected in 2018 when a 2% COLA finally did become payable.
We want this Congress to think differently about COLAs. The situation facing the nation’s retirees can be eliminated entirely if Members of Congress were to focus instead on ensuring a higher net Social Security benefit. Doing so would satisfy the Social Security Act requirement that an individual’s net benefit will not decrease from one year to the next as a result of an increase in the Part B premium. In order to prevent spiking Medicare Part B premiums, Congress could provide a 2.5% COLA payable in January 2021. An emergency COLA would need to be structured as an actual boost to the net benefits of Social Security recipients, not simply as a flat emergency payment by check in order to lift the net Social Security benefit.
The Senior Citizens League is calling on Members of Congress, to enact legislation providing a 2.5% emergency COLA payable for 2021. The Congressional Budget Office (CBO), in its January 2020 baseline, estimated that a 2.5 percent COLA would be payable for 2021. Thus, providing a 2.5 percent emergency COLA would provide only what was already projected for your Social Security benefits in 2021.
A 2.5 percent COLA would be sufficient to boost an average monthly benefit of $1,500 by $37.50. The Senior Citizens League believes it is time to focus on the adequacy of Social Security benefits to meet rising Medicare costs. COLAs have been insufficient to cover the Part B premium in five out of the past ten years — 2010, 2011, 2016, 2017, and 2018. This is a clear indication that our current system of measuring inflation and adjusting benefits is no longer working as it should for the majority of Social Security beneficiaries.
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