SSA's guideline: no COLA increase in 2010
October 15, 2009
With consumer prices down over the past year, monthly Social Security and Supplemental Security Income benefits for more than 57 million Americans will not automatically increase in 2010. This will be the first year without an automatic Cost-of-Living Adjustment (COLA) since they went into effect in 1975.

Since there is no COLA determined by the Social Security Act's guideline- the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers which did not show an increase - the statute also prohibits an increase in the maximum amount of earnings subject to Social Security tax as well as the retirement earnings test exempt amounts. These amounts will remain unchanged in 2010.

This year there was no increase in the CPI-W from the third quarter of 2008 to the third quarter of 2009. In addition, because there was no increase in the CPI-W this year, under the law the starting point for determinations regarding a possible 2011 COLA will remain the third quarter of 2008.

Michael J. Astrue, commissioner of Social Security reminds everyone that last year when consumer prices spiked, largely as a result of higher gas prices, beneficiaries received a 5.8 percent COLA, the largest increase since 1982. This year, in light of the human need, Astrue suggests the need to support President Obama's call for us to make another $250 recovery payment for 57 million Americans.

What about Medicare premiums?

The Department of Health and Human Services not yet has announced if there will be any Medicare premium changes for 2010. Should there be an increase in the Medicare Part B premium, the law contains a hold harmless provision that protects about 93 percent of Social Security beneficiaries from paying that increase and consequently reducing their net Social Security benefit. However, those not protected include higher income beneficiaries subject to an income-adjusted Part B premium and beneficiaries newly entitled to Part B in 2010.

The House passed legislation on September 24, 2009 by a vote of 406-18 that would, on a fully paid-for basis, prevent abnormally large premium increases. President Obama is calling on the Senate to enact this legislation before it becomes too late for the Social Security Administration to update its computer systems to implement the change.

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