No Social Security COLA – How does this Affect you?
Make use of an SSD lawyer to assist you during the process of application, hearing and other procedures. Benefits accrued from both social security disability (SSD) and supplemental security income (SSI) usually increase every year. This is done to take into account the natural increase in cost of living periodically. But there are certain instances where this is not necessarily the case. The recent announcement by the SSA is an example of such a case. There is no social security COLA (cost of living adjustment) for the year 2011. The year 2010 was also characterized by such a situation. However, it was the first time in 2010 after nearly three decades that such a thing happened.
Impact of no COLA
As per the Social Security Act, when there is an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year, a default increase in the SSD and SSI benefits happen. This has not been the case for 2009 and now for 2010. This has paved way to associated changes in other areas. The national average wage index will not witness a change in January 2011. Because there is no COLA, a change in the highest amount of earnings that is subjected to social security tax and on retirement earnings is also prohibited.
The inflation rate for calculating COLA became negative from the year 2008 to 2009 primarily because energy prices collapsed. However, SSA has not declared any negative COLAs. The Department of Health and Human Services has not made an announcement if there will be any change in the Medicare premium for 2011. However, in the event of an increase in Medicare Part B premium, over 70 percent of social security beneficiaries is protected from paying higher Part B premium. Nearly 20 percent of beneficiaries have the state’s medical assistance programs paying their Medicare part B premiums.
A no social security COLA has a silver lining to offer to two sections of people: high income earners and seniors. Since there is no COLA, the social security wage base continues to remain at $106, 800 for the third year. This is the annual income that is subjected to social security tax. Seniors who participated in Medicare Part B (an insurance program covering outpatient care and doctor’s visits) need not pay higher insurance premiums for 2011 as well since COLA has not been declared. But this declaration does not work for a small percentage of Medicare Part B beneficiaries who will end up paying more insurance premium than they would have if COLA has been declared.
This is based on the simple rationale that they will get to pay more for those who do not have to pay. Although, this declaration has been viewed differently by different groups of people, there seems to be both advantages and disadvantages to this case. While it turns out to be beneficial or neutral to certain groups of people, it is quite disappointing to another cross section of people.
