Seniors May Get COLA Next Year, But Medicare Premiums Will Take It All

Seniors May Get COLA Next Year, But Medicare Premiums Will Take It All

Alexandria, VA (March 23, 2010)  First, here's the good news - the U.S. Congressional Budget Office (CBO) recently forecast that annual cost-of-living adjustments (COLAs) of Social Security beneficiaries will resume next year.  The CBO predicted a very low, 1.1 percent COLA in 2012, coming after two unprecedented years in which beneficiaries received no COLA at all.

Now, the bad news - this would be the lowest COLA ever paid in years where there was a COLA. The boost may not be enough to prevent Social Security payments from continuing to shrink, warns The Senior Citizens League (TSCL), one of the nation's largest nonpartisan seniors groups.  A new analysis released by TSCL indicates that even if the Medicare Part B base premium stays the same as it is today, at $115.40 per month, the majority of beneficiaries will still see lower net Social Security payments in 2012 after deductions for Medicare Part B, Part D and Medicare Advantage premiums.

A recent survey by TSCL found that nearly half of seniors are reporting lower Social Security checks in 2011 after deduction of Medicare premiums.  Of these, one in four are receiving at least $50 less per month, and one in nine say they are receiving at least $100 less per month.  On the other hand, survey respondents said their overall monthly expenses continued to rise dramatically from 2010 to 2011.  Twenty-three percent reported their monthly expenses had increased at least $80, and 35% said their monthly expenses had increased more than $119.

The findings come as Congress wrestles with reducing the federal budget deficit and debates Social Security reform.  President Obama's Fiscal Commission recently proposed using a more slowly-growing Consumer Price Index to calculate annual Social Security COLAs.  The proposed change is estimated to reduce COLAs by about 0.3 of a percentage point.

Although the proposed change seems tiny, TSCL says that it's larger than it would seem.  It could cost seniors who retired with average benefits of $1,170 in 2010 about $15,222 over a 25-year retirement.  By 2033, seniors would receive a monthly benefit that's about $131 lower, using the more slowly-growing CPI.

"Make no mistake.  The difference would compound over time," says Larry Hyland, Chairman of TSCL.  "At the same time Medicare costs would continue to take a bigger piece of Social Security benefits, retirees risk inadequate benefits and running through their savings," Hyland says.


With over 1 million supporters, The Senior Citizens League is one of the nation's largest nonpartisan seniors groups. Located just outside Washington, D.C., its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association.