Itfs Official: No Social Security COLA in 2010
Obama supports bills in Congress that would give beneficiaries a
$250 payment
By: Carole Fleck | Source: AARP Bulletin Today
| October 15, 2009
For the first time in 35 years, millions of older Americans wonft be getting
a fatter Social Security payment next year. As expected, the Social Security
Administration announced Thursday that there wonft be an automatic
cost-of-living adjustment (COLA) for 2010.
But beneficiaries can still hope for extra money. President Barack Obama on
Wednesday called on Congress to approve a new $250 payment to some 56 million
people next year in lieu of a COLA. The payment, equal to a 2 percent increase,
would go to those who receive Social Security retirement or disability benefits,
veterans benefits, and to railroad retirees and retired public employees who
donft get Social Security. A $250 payment for many of the same people was
included in the huge federal stimulus package approved earlier this year.
Obamafs proposal, which is similar to several bills in Congress, would cost
about $13 billion. Michael J. Astrue, commissioner of Social Security, called on
lawmakers Thursday to support Obamafs plan.
Plea for ethose hardest hitf
gEven as we seek to bring about recovery, we must act on behalf of those
hardest hit by this recession,h Obama said. gThis additional assistance will be
especially important in the coming months, as countless seniors and others have
seen their retirement accounts and home values decline as a result of this
economic crisis.h
Sen. Bernie Sanders, I-Vt., and Rep. Peter DeFazio, D-Ore., are sponsors of
legislation to provide a $250 payment to Social Security recipients to make up
for the lack of a COLA. A separate bill in the House, sponsored by Rep. Carolyn
McCarthy, D-N.Y., would give beneficiaries a payment of $150. Most top
Democratic leaders in the House and Senate back the extra payment, though some
Republicans oppose it.
Social Security COLAs are tied to inflation, which has been negative this
year, largely because of lower energy costs. But advocates say older people
still face higher living expenses because they spend a disproportionate amount
of their income on health care, which rises faster than inflation every year.
Many also have suffered from shrinking nest eggs and retirement income.
gThe current recession has become a perfect storm for millions of older
Americans, who find themselves struggling with skyrocketing health care costs,
shattered nest eggs and now stagnant Social Security benefits,h AARP CEO A.
Barry Rand said in a statement. gAARP calls on Congress to take up the
presidentfs call to action, and provide $250 in relief to millions of Americans
who count on Social Security to pay their bills.g
Some argue that Social Security recipients should not get additional money.
gSince the purpose of COLAs is to preserve beneficiariesf purchasing power, the
decline in overall prices means that beneficiaries do not need a COLA in January
2010,h according to a report by Kathy Ruffing, a policy analyst at the
Washington-based Center on Budget and Policy Priorities.
Next year will be the first time since 1975 that Social Security
beneficiaries have not received a COLA. About 51 million retirees and Americans
with disabilities get Social Security benefits. The average monthly benefit for
retirees is $1,160 this year. All beneficiaries received a 5.8 percent increase
in January, the largest in 26 years.
Medicare premiums may rise for millions
Without a COLA, about 6 million people who have Medicare Part D prescription
drug premiums deducted from their checks could actually see a slight decrease in
payments next year, since those premiums are expected to rise. According to the
Centers for Medicare & Medicaid Services, Part D premiums will rise to about
$30 in 2010 after a $2 average increase, though some may see a much larger
increase depending on their plan.
Millions of people with Medicare Part B coverage for doctorsf visits also
have their premiums deducted from Social Security payments. Part B costs are
expected to rise as well for some beneficiaries unless Congress steps in to
freeze their premiums.
By
law, a Part B increase cannot be larger than the increase in Social Security
benefits for most recipients. That means more than 75 percent of Medicare
beneficiaries wonft see a premium hike. But without congressional action,
premiums will rise for about 11 million beneficiaries. These include those who
pay an additional high-income surcharge for Part B, those who will be new to
Medicare next year, and low-income gdual eligiblesh who receive both Medicare
and Medicaid and have their Part B premiums paid by Medicaid.
Those groups face a hike in premiums of up to $25 a month in 2010, according
to the Congressional Budget Office.
Last month the
House voted overwhelmingly to eliminate premium increases for Part B
coverage, saying older Americans shouldnft have to pay more since theyfre not
getting a COLA. The bill is now being considered by the Senate.
Carole Fleck is a senior editor at the AARP Bulletin.