Aging Parents Won’t Receive Social Security Increase

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alz-checkbook-300x201.jpgAging parents and others who are on Social Security, take note: according to a press release from the Social Security Administration, there is currently no scheduled cost-of-living adjustment (or COLA, as it is often known) scheduled for Social Security recipients next year.


The COLA was built into the Social Security system in the 1970s by Congress. Under the current legislation, the COLA increase has averaged 4.1% over the last 40 years. But, significantly, in the last decade the increase has averaged only 2% — and if there is no increase in 2016, it will be the third time in the last decade with no increase. (The other years with no adjustments were 2010 and 2011.)

How does that figure?

How is the determination made on whether an increase is called for (and by how much benefits should increase)? The legislation that provided for the COLA includes a formula. Essentially, two pieces of information are consulted: the Consumer Price Index (CPI) for the third quarter of the last year in which there was a COLA increase (2014, in this instance) and the third quarter of the current year. If there is no increase in the CPI, there is no increase in the COLA for Social Security.

What about prescriptions?

Medicare has not yet determined if there will be any changes in Medicare premiums for 2016. According to the press release, if there is an increase in premiums, “the law contains a 'hold harmless' provision that protects approximately 70 percent of Social Security beneficiaries from paying a higher Part B premium, in order to avoid reducing their net Social Security benefit.”

Why no change?

According to the Wall Street Journal, it’s “soft inflation” that accounts for the CPI not rising year to year. In particular, the fact that gas prices have fallen about 30% seems to play a major role in the “flat” CPI.

Many aging parents may feel frustrated at the lack of an increase. And aging parents who fall into the 30 percent of Medicare patients who may see premiums rise may feel especially frustrated.

It is possible that Congress could pass legislation extending the “hold harmless” provision to all Medicare beneficiaries; however, at the time of this writing, no such action has been proposed in Congress.​

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