[nfbwatlk] FW: No SSA COLA for 2010 or 2011

[Nightingale, Noel]

Information of interest to Social Security recipients


-----Original Message-----
From: ESD GP GCDE-INFO [mailto:GCDE-INFO at ESD.WA.GOV]
Sent: Wednesday, May 20, 2009 5:14 PM
To: GCDE-INFO at LISTSERV.WA.GOV
Subject: FW: No SSA COLA for 2010 or 2011



________________________________
From: Olson, Toby
Sent: Wednesday, May 20, 2009 12:07 PM
To: ESD GP GCDE-INFO
Subject: No SSA COLA for 2010 or 2011

The New York Times

Published: May 4, 2009

WASHINGTON - For the first time in more than three decades, Social Security recipients will not get an increase in their benefits next year, federal forecasts show.

The absence of a cost-of-living adjustment, calculated under a formula set by law, will be a shock to older Americans already hit by plummeting home values, investment losses and rising health costs.

"Most seniors have never been through a year in which there was no Social Security COLA," said David Certner, legislative counsel at AARP.

In theory, low inflation is good for people on fixed incomes. But it is creating political and policy problems for Congress, which is just learning of the implications for Social Security and Medicare.

The forecasts, by the Obama administration and the Congressional Budget Office, indicate that Social Security beneficiaries will not receive any cost-of-living increase in 2010 or in 2011.

Social Security and Medicare trustees will describe the outlook for benefits and premiums in their annual reports this month.

Officials have already said the condition of Medicare's hospital insurance trust fund is deteriorating because of the recession, which has reduced payroll tax revenue, the main source of money for the fund. Spending on Social Security and Medicare totaled more than $1 trillion last year.

Douglas Elmendorf, director of the Congressional Budget Office, predicted that inflation would remain low for several years, so Social Security might not pay a cost-of-living increase until January 2013. President Barack Obama's budget assumes no increase in 2010 or 2011, then a 1.4 percent COLA in 2012.

Certner, from AARP, described the outlook for consumers: "If, as expected, there is no COLA in Social Security next year but premiums for drug coverage increase, as expected, millions of beneficiaries will see their Social Security checks reduced for the first time."

COLA AND MEDICARE

The cost-of-living adjustment is intended to preserve the purchasing power of those reliant on Social Security by increasing benefits to keep pace with consumer prices. A freeze in Social Security benefits would have major implications for Medicare, because premiums for Part B of Medicare, which covers doctors' services, are in many cases capped at cost-of-living increases.

*Under federal law, most Medicare beneficiaries have some protection. Their basic Part B premiums cannot rise more than the dollar amount of the cost-of-living increase in their Social Security checks. So if there is no COLA, their basic Part B premiums will not increase.

*But one-fourth of Medicare beneficiaries are not protected by the law, and their premiums could increase.

*In addition, millions of beneficiaries could see higher premiums for drug coverage, provided under Part D of Medicare.

*Most Medicare beneficiaries pay a monthly Part B premium of $96.40. The Congressional Budget Office estimates the basic premium will rise to $119 next year and $123 in 2011 for those who are not protected under federal law.

The New York Times