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Social Security COLA's
Old 03-14-2009, 09:47 AM   #1
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Social Security COLA's

I read something interesting in the WSJ this morning. As many of you know (at least those on SS), the COLA adjustment is figured by comparing the average CPI-W in the third quarter to that of the previous year's average, and calculating the percentage increase. Based upon numbers reported already, and expectations for future numbers, this increase is expected to be zero, or maybe even down a bit this year. However, unlike TIPS for example, the SS payment cannot be reduced by deflation. Also, if the SS payment doesn't increase, the Medicare Part B premium can't be increased (except for those whose Part B premium is means-tested), since by law, it's increase can't exceed the SS increase.

Social Security Benefit Unlikely to Rise
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Old 03-14-2009, 11:37 AM   #2
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It only makes sense. I hope no one expects an increase if inflation is ZERO or below. And no, we don't need to hear all the arguments about CPI-U being rigged again...
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Old 03-14-2009, 11:42 AM   #3
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It only makes sense. I hope no one expects an increase if inflation is ZERO or below.
Well, that's to state the obvious. What surprised me, was that it wouldn't be decreased if we had deflation.
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Old 03-14-2009, 11:44 AM   #4
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And no, we don't need to hear all the arguments about CPI-U being rigged again...
We've beaten every other forum dead horse to mush over and over again, why should this one be any different?
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Old 03-14-2009, 11:45 AM   #5
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We've beaten every other forum dead horse to mush over and over again, why should this one be any different?
The difference is CFB isn't here anymore.
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Old 03-14-2009, 11:47 AM   #6
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We've beaten every other forum dead horse to mush over and over again, why should this one be any different?
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Old 03-14-2009, 12:05 PM   #7
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Originally Posted by FIRE'd@51 View Post
I read something interesting in the WSJ this morning. As many of you know (at least those on SS), the COLA adjustment is figured by comparing the average CPI-W in the third quarter to that of the previous year's average, and calculating the percentage increase. Based upon numbers reported already, and expectations for future numbers, this increase is expected to be zero, or maybe even down a bit this year. However, unlike TIPS for example, the SS payment cannot be reduced by deflation. Also, if the SS payment doesn't increase, the Medicare Part B premium can't be increased (except for those whose Part B premium is means-tested), since by law, it's increase can't exceed the SS increase.

Social Security Benefit Unlikely to Rise
Medicare Part B premiums increased over 13% in 2004 and over 17% in 2005 and the COLA was WAY less. So do not bet the farm on them not increasing for 2010; however as I understand the quoted article if they do increase that amount would be added to the SS benefit so that it does not result in a actual dollar decrease in benefits (seems a bit of voodoo economics to do that but WTH it is the Government). IMHO the use of "cannot", and "can't" may be a bit of wishful thinking in the current political environment. Additionally, there was another year recently (within the scope of the atricle) where the CPI was 0 and that was 1986.
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Old 03-14-2009, 12:28 PM   #8
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Medicare Part B premiums increased over 13% in 2004 and over 17% in 2005 and the COLA was WAY less.
They go by $, not percentage, so the Part B premium % is working off a much smaller base. I don't know what the Part B premiums were in 2004 or 2005, but using today's premium of $96.40, 17% would be $16.39. The SS COLA adjustment in 2004 (for 2005) was 2.7%. So anyone getting a monthly SS payment greater than $607 (16.39 / 0.027) would be subject to the Part B premium increase, since it wouldn't result in a decreased SS payment.
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Old 03-14-2009, 01:21 PM   #9
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True, but I remember DW SS going UP $3 in 2005. I do not see her SS going up in 2010, or mine for that matter. My point was that MC Part B premiums CAN and quite possibly WILL go up for 2010. The unique thing is that, the way I read the article, was that IF they do (and the CPI is 0 or negative) any increase would be offset for a current beneficiary by a increase in benefits to offset (so that a current beneficiary does not realize a reduction in benefits) - of course they will see an increase in TAXES (if at that income level) but, that is another subject. Additionally, for anyone STARTING SS in 2010 they would have benefits REDUCED to offset the current, or higher MC Part B Premiums; or possibly get a higher overall initial benefit to offset. This may come into play for 2010 (it did not for 2005):

Source: http://www.law.umaryland.edu/marshal...ts/RL32582.pdf

The size of the 2005 increase in the Part B premium has received considerable
attention. As noted, an individual’s social security check cannot go down from one
year to the next as a result of the increase. However, some observers have suggested
that beneficiaries should not face the prospect of losing a large portion of their costof-
living (COLA) increase. For example, the Social Security COLA Protection Act
of 2004 (S. 2754, Daschle, et al. and HR. 4910, Herseth et al.) would specify that the
premium increases for both Part B and the new Part D could not exceed 25% of a
beneficiary’s COLA increase in a year. It should be noted that any premium costs not
paid by beneficiaries would be paid from federal general revenues, thereby increasing
overall federal Medicare costs.
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Old 03-14-2009, 03:11 PM   #10
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The difference is CFB isn't here anymore.
You're right. What happened to CFB? CFB always had a unique perspective on things.
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Old 03-14-2009, 03:15 PM   #11
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