Update: October 15, 2010 – It’s official – no social security increase in 2010 – $250 payment pushed.
It will be the first time in 3 decades, but there will be no cost-of-living increase for social security recipients in 2010. Following a formula set by law to counter the effects of inflation, beneficiaries can usually count on getting a “raise” every year. Thanks to the economic slowdown, inflation is not a problem at the moment, hence the formula indicates no increase next year.
According to the AARP, beneficiaries have received automatic cost-of-living every year since 1975. The increase in 2009 was 5.8%. Controlling inflation should be a good thing for retirees because it means the prices they pay for goods and services are not increasing.
A “no increase” result has implications for Medicare beneficiaries who payPart B premiums. Approximately 3/4 of recipients are protected from increases in their Part B premiums: their premiums cannot go up more than the dollar amount of their Social Security increase. The remainder of recipients can probably expect an increase in their premium from $96.40 to $119 in 2010. Premiums for drug coverage could also go up.
About one in four (or about 11 million) beneficiaries are not protected from a Part B increase because they:
- do not have Part B premiums withheld from their Social Security income, or
- have a higher income and therefore pay a higher Part B premium, or
- recently enrolled for Part B.
For further reference:
AARP article on Part B Premiums