On October 13, 2017, the Social Security Administration announced that the nation’s nearly 66 million Social Security recipients will receive a 2% cost of living increase for 2018. This is up from last year, which saw a 0.3% increase. The increase will show up in regular Social Security checks in January and for Supplemental Security Income (SSI) benefits on Dec. 29, 2017.
Since 1975, the law has linked Social Security COLA to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It is set each October based on the CPI-W for the 12 months ending September 30. Social Security COLAs have flat-lined at unprecedented lows over the past seven years, averaging just 1.2% a year, which is, less than half the 3% that COLAs averaged from 2000 to 2009.
Medicare Part B
To protect seniors living on fixed incomes, a Federal “hold harmless” provision was put in place prohibiting Medicare from raising Part B premiums if doing so would end up reducing an individual’s Social Security benefits. This applies to about 70% of people enrolled in Part B including seniors who’ve been enrolled in Medicare for most of the past year and whose Part B premiums are automatically deducted from their Social Security checks. Excluded are seniors who are newly enrolled in Medicare or those dually enrolled in Medicaid or enrolled in Medicare Savings Programs. Also excluded are older adults with high incomes who pay more for Part B because of Income-Related Monthly Adjustments.
In 2016, there was no Social Security COLA increase so Part B monthly premiums didn’t go up for seniors covered by the hold harmless provision. Instead, they remained flat at $104.90. In 2017, Social Security experienced a tiny 0.3% COLA which resulted in average Part B monthly premiums rising slightly to $109 for seniors in the hold harmless group and to $134 for those not in this group.
At this writing, the Medicare Part B premium has not been released but should be soon.
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