COLA Announcement Expected Soon
By Mary Johnson
Next year seniors will pay a standard monthly Part B premium of $96.40. The Centers for Medicare and Medicaid Services recently announced the monthly Part B premium deductible and other program costs. Individuals whose incomes exceed $82,000 in 2008 or couples with incomes exceeding $164,000 will pay even more.
Later this month, the Social Security Administration will announce the 2008 Cost-Of-Living Adjustment (COLA). The Congressional Budget Office recently predicted that the 2008 COLA would be 2.5%. Watch your mail in November for a notice from the Social Security Administration explaining the amount of your COLA increase for 2008 and what your Medicare Part B premium will be.
Daniel O’Connell, Chairman of The Senior Citizens League (TSCL), observes, “We seniors often say that we ‘live on a fixed income.’ But in reality, we live on a shrinking one.” That happens because the consumer price index (CPI) used to calculate the annual COLA doesn’t fairly track the expenses of seniors, but those of younger working people instead. For example, the Centers for Disease Control and Prevention say that healthcare costs for older Americans are three to five times greater than care for younger adults.
In the past seven years, Medicare Part B premiums doubled, growing 100%, but annual Social Security COLAs rose less than 20%. Social Security beneficiaries would receive a COLA that better keeps pace with rising costs, using a “seniors” CPI, the Consumer Price Index for the Elderly (CPI-E). The government has maintained the index since 1983, but never used it to calculate the annual COLA.
According to a TSCL study, seniors who retired with an average benefit of $460 in 1984 would have a monthly Social Security check that’s $70 higher today had the government used the CPI-E to calculate the annual COLA. Since 1984 those seniors would have received $10,290 more in total benefits had the government used the CPI-E to calculate the annual COLA.
Two bills are now pending in the House that would ensure Social Security beneficiaries receive a more fair COLA by calculating Social Security COLA increases using the CPI for Elderly Consumers (CPI-E). Representative Charles Gonzalez (TX) introduced “The Consumer Price Index For Elderly Consumers Act” (H.R. 1953) with Representative Robert Wexler (FL) as an original co-sponsor. Representative Peter DeFazio introduced a similar bill (H.R. 2032). TSCL expects similar legislation to be introduced in the Senate soon.
Sources: 2007 Social Security Trustees Report, April 23, 2007. 2007 Medicare Trustees Report, April 23, 2007. “The Budget and Economic Outlook: An Update, CBO, August 2007.