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Friday, September 18, 2015

Social Security 2016 COLA increase unlikely, But with Medicare increase for some

In a decision that could have gone either way, the Fed's decided not to raise its key interest rate in September.

article by Jim Watkins | Ability Chicago Info | Sept. 18, 2015

For those collecting Social Security, this could lead to NO Cost Of Living Adjustment (COLA) for 2016. Inflation hasn't been high enough to trigger a Social Security cost of living adjustment, or COLA, for 2016, according to predictions in August by Social Security's trustees.

The Fed’s committee raised its expectations for economic growth this year to 2.1% from 1.9%, and it lowered its projection for the unemployment rate by the end of the year to 5%. Currently, unemployment is 5.1%.
“Recent global economic and financial developments may restrain economic activity somewhat,” the Fed’s committee said in a statement.
Medicare Part B premium will stay the same in 2016 for a estimated 70% of participants as it has been for the last couple of years: $104.90. That's because of the relationship between Social Security and Medicare. 

The rules contain a hold-harmless clause that prevents increases in Medicare costs that are greater than Social Security's COLA. So if the trustees' prediction last month holds true -- that there won't be any COLA in 2016 -- for most participants that means Medicare Part B costs will be flat.

But some 30% of Medicare participants can expect a significant increase in Part B costs -- as much as 52% in 2016 -- because Medicare is required by law to cover a certain amount of its costs. If the costs can't be shared among everybody because of the hold-harmless clause, then those people not covered under the hold-harmless clause will feel the pain. 

Who will pay more?

  • People new to Medicare in 2016.
  • People who have deferred claiming Social Security til at least 2016.
  • People in a Higher Income limit. (annual incomes are above $85,000 for an individual or $170,000 for a couple)
For the Social Security Administration, visit: http://www.ssa.gov/

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