No COLA In 2011!

No COLA In 2011!

The Social Security Administration has confirmed that inflation had not increased enough to pay a COLA in 2011.

This makes the second year in a row without a COLA for Social Security—no COLA was paid in 2010 either.  The law states that in order for a COLA to be paid, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) must surpass the level it achieved the last time a COLA was paid, i.e. in the third quarter of 2008.

As of this writing, the Centers for Medicare and Medicaid Services (CMS) has not released information on Medicare premiums for 2011.  The Medicare Trustees estimated in their 2010 report that premiums would increase to $120.10 per month.  In 2010, they were scheduled to go up to $110.50 from $96.40.  However, roughly 75% of beneficiaries did not see an increase in 2010 and their premiums remained at $96.40.  In 2011 again, if premiums go up, roughly 75% of beneficiaries’ premiums will stay at $96.40.

Under the Patient Protection and Affordable Care Act (PPACA), signed into law in March of this year, 2011 is the first year where “high-income” Medicare beneficiaries—individuals with an adjusted gross income (AGI) of $85,000 and couples with an AGI of $170,000—are “means tested” and will have to pay increased premiums for Medicare Part D.  Many of these beneficiaries have been paying increased Medicare Part B premiums since 2007.  It is expected that Medicare Part D, Medicare Advantage and many Medigap plans will increase their premiums and other out-of-pocket-costs for 2011.

Typically, CMS announces premiums very close to the COLA announcement.  When TSCL emailed CMS asking about the delay, a spokesperson responded that CMS is “just not ready.”  The spokesperson elaborated that “They [the Medicare premium numbers] will be out by the end of the year” but CMS could not confirm a date.

TSCL hopes to see the premium figures shortly.  This will be a very important announcement because if premiums increase, it will trigger “hold harmless” for 75% of beneficiaries.  Given that this is the first year where Medicare Part D will be “means-tested” an additional layer of complexity and importance is added to the announcement.

If premiums go up, two straight years of no Social Security COLA will create further inequities in Social Security.  In a survey conducted by TSCL this year, approximately 51% of respondents reported reduced Social Security checks from 2009 to 2010, due to increased Medicare premiums.  If Medicare premiums go up, millions of seniors may see reduced Social Security checks again.

No COLA in 2011: What Is Being Done?

Prior to the announcement, the Speaker of the House, Nancy Pelosi (CA) announced that Congress will vote on a bill in a “lame duck" session in November to provide a $250 payment for Social Security recipients in 2011.  The bill is H.R. 5987,The Seniors Protection Act, introduced by Rep. Earl Pomeroy (ND).  Rep. Pomeroy is the chairman of the Subcommittee on Social Security of the House Committee on Ways & Means.

According to an article in Congressional Quarterly, in a statement Rep. Pomeroy said, “I’ve worked hard with my colleagues to make this bill a priority, and I am very pleased that we have received Speaker Pelosi’s commitment to bring this bill for a vote on the House floor.”

TSCL supports H.R. 5987 and hopes that Congress will act on it.  However, Congress has still yet to pass an emergency COLA bill for 2010, such as Congressman Walter Jones’ H.R. 3557.  TSCL believes that it would be irresponsible of Congress to continue to ignore the hardships that many seniors experienced this year, by not passing an emergency COLA for 2010.

In addition, Rep. Steve Rothman (NJ) has been circulating a letter requesting that President Obama include $500 in his fiscal year (FY) 2012 budget request, to offset the lack of a Social Security COLA in 2010 and 2011.  President Obama included a $250 payment in his FY2011 budget request.  TSCL obtained a copy of a “Dear Colleague” letter distributed to Members of Congress from Rep. Rothman.

Rep. Rothman’s “Dear Colleague” letter requests that Members of Congress join him by signing on to his letter.  The “Dear Colleague” also states that his “letter notes that reform of the formula used to compute the Social Security COLA is the ultimate solution, but stresses the need for immediate relief to seniors struggling to make ends meet with a fixed income, and ever-increasing expenses.”

TSCL could not agree more; seniors buying power has been declining over the years because Congress does not base COLAs on an index that measures seniors’ costs, like the Consumer Price Index for the Elderly (CPI-E).  Not receiving Social Security COLAs in 2010 and 2011 will only exacerbate this problem.