COLAs for Social Security, SSI and VA Disability Plus Medicare Part B Premium Changes Announced for 2019

On October 11, the Social Security Administration (SSA) announced a 2.8% increase in Social Security and Supplemental Security Income (SSI) for more than 67 million Americans. The cost of living adjustment (COLA) will begin with benefits payable in January 2019. This increase is tied to the Consumer Price Index as determined by the Bureau of Labor Statistics.

On October 12, the Centers for Medicare & Medicaid Services (CMS) announced the 2019 Medicare Parts A & B changes. The standard monthly premium for Medicare Part B enrollees will be $135.50 for 2019, an increase of $1.50 from $134 in 2018. Approximately 2 million Medicare enrollees will pay less than this amount due to the statutory hold harmless provision which limits the Medicare premium increase to no greater than the increase in their Social Security benefits.

And finally, the 2019 VA Disability COLA will increase 2.8% and will be effective December 1, 2018.

Calculating the 2019 SSA Benefits

If you have a household moving in or who has a recertification due on or after the October 11, 2018 benefit announcement date, you will need to determine the number of months the recipient will receive 2018 benefits and the number of months he will receive 2019 benefits. So for example, if the household moves in on December 1, you will count 1 month of 2018 Gross Social Security benefits and 11 months of the 2019 Gross Social Security benefits.

To do this, take the following steps:

  • Step #1: Determine the 2018 Gross Social Security Benefit: 2018 Gross Social Security = 2018 Social Security Net Benefit + 2018 Medicare

You have an applicant apply for a December 1, 2018 move-in
that receives Social Security 
and it is verified that her
2018 Social Security Net Benefit was $742
with a 2018 Medicare amount of $134.00.

2018 Gross Social Security = 2018 Social Security Net Benefit + 2018 Medicare

$876.00 = $742.00 + $134.00

  • Step #2: Determine the 2019 Gross Social Security Benefit: 2019 Gross Social Security = (2018 Social Security Net Benefit + 2.8%)* + 2019 Medicare Premium

* Drop change before adding Medicare premium
** REMEMBER: 2019 Medicare Premium is $135.50 for many recipients
but is lower for some as they are protected by the hold harmless provision .

Continuing the Example from Step #1:
($742.00 + 2.8%) = $762.776 which = $762
$897.50 = $762.00 + 135.50

  • Step #3: Annualize the Gross Social Security Benefits: (2018 Gross Social Security Benefit x 1 month) + (2019 Gross Social Security Benefit x 11 months)

Continuing the Example from Step #2:  
($876.00 x 1) + ($897.50 x 11)
= $10,748.50

High Estimate Method

An alternative to this calculation method, in which I call the High Estimate Method, can be used if you have no subsidy programs on your Housing Credit property and the household’s rent is not based on its income. The High Estimate Method is simply done by assuming the 2019 benefit is in effect on the day our example household moves in, which in this case was December 1, 2018. This means I will take the 2019 Gross Social Security benefit and multiple it by the full 12 months. Since the household’s rent is not based on the household’s income, this method is quicker and easier to complete assuming the household still qualifies. However, if the calculation puts the household over the income limit, the longer, more exact method described earlier should be completed to determine if the household qualifies.

If you applied the High Estimate methodology
to the example we worked through above,

 you would simply take the 2019 Social Security Gross Benefit
we calculated and multiple it be 12 months.

897.50 x 12 = = $10,770.00

HUD’s Interpretation on Social Security Printouts

Now, before we leave this subject, we must discuss the printout that you may obtain from your applicants/residents to verify their Social Security benefits.

There are two types of printouts your applicants/residents could bring you, both containing slightly different numbers. One such printout indicates the net benefit after the increase has been applied and is the number BEFORE the change is dropped. The other printout that you may receive indicates the increased benefit amount AFTER the change is dropped.

As I discussed above, if this number includes change, such as the $754.61 we arrived at in our example, SSA drops it and it is never received by the recipient. However, several years ago HUD was asked how to treat this change in our calculations and they indicated their answer, along with numerous answers to other questions posed to them, in a published document entitled HUD Handbook 4350.3 Rev 1 Summary of Questions.

The following question (Question #71) was asked, “When calculating SS income, owners/agents should use the gross amount. But, do owners/agents include the cents on SS payment amounts, although not received? For example, if the gross amount is $570.20, but the net is $570, do owners/agents calculate as $570.20 x 12?”

HUD’s response was, “When calculating Social Security income, use the gross amount shown on the third-party verification, including cents. Acceptable forms of third-party verification can be found in Appendix 3, “Acceptable Forms of Verification”.

So, if the printout you receive includes the amount BEFORE the change is dropped, you will need to use this number to complete your calculations. So, again, referring to our example, this will mean you will use a Gross Benefit of $859.51 for 2015 (754.61 + $104.90), but if you receive the printout that reflects the benefit amount AFTER the change is dropped, you may rely on the rounded down amount.

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