Today’s announcement that there will be a tiny .3% Social Security cost-of-living adjustment (COLA) increase next year means that 40 million seniors who rely on their Social Security to get by will once again find their expenses outpacing their Social Security benefit. This continues the trend of historically low cost-of-living adjustments for seniors. Over the past eight years, the current COLA formula has led to average increases of just over 1%, with three of those years seeing no increase at all. For the average senior, the 2017 COLA will mean an extra $4.00 per month which would barely cover the average cost of one Lipitor pill, a prescription drug frequently prescribed to seniors.
“No one can say with a straight face that providing the average senior with an additional four dollars a month will come even close to covering the true cost of living that retirees face. The average senior spends more than $5,000 a year on healthcare costs alone. A $4 Social Security COLA doesn’t even make a dent in covering rising costs for seniors.
I’ve asked seniors at town hall meetings around the country how many of them think the COLA represents their true cost of living — laughter is always the response. We should move to a COLA formula that takes a more accurate measure of seniors’ expenses, which is a CPI for the elderly. The CPI-E has been in the experimental phase since 1982. It’s time to finish the job by fully funding the development of a more accurate COLA formula.”…Max Richtman, NCPSSM President/CEO
While the Affordable Care Act has slowed the growth of Medicare costs, Part B premiums continue to rise much faster than the COLA. Final Medicare premiums won’t be announced until later this fall; however, the majority of beneficiaries (70%) are protected from steep premium hikes due to “hold harmless” provisions in the law which protects Social Security benefits from being reduced if the COLA is not large enough to cover the increase in the Part B premium.
The 30% of beneficiaries not eligible for the hold harmless provision include; new enrollees during the year, enrollees who do not receive a Social Security benefit check, enrollees with high incomes who are subject to the income-related premium adjustment, and dual Medicare-Medicaid beneficiaries, whose full premiums are paid by state Medicaid programs. They could face much higher premium costs.
Congressional action mitigated the Part B premium hike last year for these beneficiaries. The National Committee will, once again, work with key Members of Congress and the Administration to ensure these seniors aren’t hit with a significant premium increase next year.