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More About the COLA

pedestrian elderly.jpgIn a previous blog, we discussed the lack of a cost of living increase for people receiving federal benefits such as Social Security Disability (SSD). This post describes other issues associated with the cost of living adjustment (COLA), including its history.

To begin at the beginning: Congress authorized automatic increases in 1975 for most federal benefit programs when inflation was high. Increases since then have averaged about 4 percent a year. However, inflation has only been at this level once in the past decade, and increases have been less as a result. COLAs have been added to federal benefits every year for the past 40 years except in 2010, 2011, and now 2016.

An unintended consequence of not providing a COLA this year is that some Medicare recipients, including those receiving SSD, may be hit with a Medicare part B premium increase. These premiums could rise by as much as $54 per month. In the case of SSD recipients, who receive on average $1,164.94 a month in benefits, Medicare premium payments could be at least 4 percent of the disability benefit. These beneficiaries will have no COLA increase to absorb the premium increase, more than 50 percent of the current premium rate.

Democrats in Congress are trying to freeze the part B Medicare premiums, but the bill is unlikely to pass. In addition to its effect on individual recipients, the increase will affect state Medicare programs that pay a percentage of Medicare premiums for those with low incomes.

In an effort to make up for the lack of a 2016 COLA, at least 19 senators have signed on to legislation that would authorize a 3.9 percent one-time benefitpayment. Introduced by Sen. Elizabeth Warren, D-Mass., the Seniors and Veterans Emergency Benefits Act would give seniors, veterans and those receiving SSD benefits the same increase as the average CEO in the United States.

This information was brought to you by Binder & Binder®, America's most successful Social Security Disability advocates. If your application for benefits has been denied, know that you are not alone - a majority of initial SSD claims are denied, forcing applicants to appeal. If this sounds like you, give our advocates a call and find out how they can help.

Source: https://www.washingtonpost.com/blogs/federal-eye/wp/2015/10/15/lack-of-inflation-is-bad-news-for-social-security-recipients/

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