COLA? What COLA?

December 17, 2010

Author: Catherine M. Callery (Kate)| Louise M. Tarantino

Recipients in all of Social Security’s benefit programs, including retirement, disability and SSI, will be disappointed again in 2011 because of no cost-of-living adjustment (COLA) for the second year in a row.  Benefits for 2011 will continue at the same level as payments made in 2009. http://www.socialsecurity.gov/pressoffice/factsheets/colafacts2011.pdf.

While it is difficult for Social Security’s millions of recipients to understand why their benefits will not increase while the cost of housing, utilities, gas, food, and general consumer goods seem to rise daily, existing law precludes a COLA because of flat numbers in the Consumer Price Index (CPI). According to the Social Security Act, any upward adjustment in the benefit payment level is tied to an increase in the CPI; since the CPI has not gone up since the third quarter of 2008, Social Security benefits may not be increased.

Although there has been some legislative interest in updating the 30 year old COLA formula to more accurately reflect the needs of senior citizens and other Social Security beneficiaries, no action has been finalized.  See, e.g., Consumer Price Index (CPI) for Elderly Consumers Act of 2009 (H.R. 2365), which has not been adopted by the Congress.  http://www.govtrack.us/congress/bill.xpd?bill=h111-2365. 

Meanwhile, some proponents of a government deficit reduction plan propose several significant changes to Social Security, including a gradual increase in the Social Security retirement age to 68 by 2050 and 69 by 2075, using a less generous cost-of-living adjustment for the programs, and increasing the cap on income subject to Social Security taxes.

So let’s do the numbers for 2011 (cue stormy weather music):

Nothing changes from 2010, so the SSI federal benefit rate ($674 for an individual, $1,011 for a couple) and the New York State supplement remain the same.  A 2011 SSI benefit chart for New York is available at http://otda.ny.gov/policy/directives/2010/INF/10-INF-23-Attachment-1.pdf.  Both the substantial gainful activity (SGA) thresholds ($1,000 for non-blind, $1640 for blind beneficiaries) and the trial work period (TWP) standard ($720) remain the same as last year.

The maximum taxable earnings for OASDI (old-age, survivors and disability insurance) purposes will remain at $106,800 for 2011.  Note some discussion about raising that cap, but nothing will happen in the coming year.  The quarter of coverage amount remains at $1,120.

Most beneficiaries will continue to pay the same $96.40 or $110.50 Medicare Part B basic premium amount per month in 2011.  Beneficiaries who were enrolled and had the premium deducted from their Social Security payment prior to January 1, 2010, and whose annual income is not above $85,000 for a single person or $170,000 for a married couple will continue to pay $96.40.  Beneficiaries who first enrolled in Medicare Part B in 2010, and meet the same criteria and income guidelines stated will continue to pay $110.50.

New Part B beneficiaries and enrollees who do not have their Part B premiums deducted from their Social Security payment (e.g., their premiums are paid for them by Medicaid or Medicare Buy-In), will be charged $115.40 per month in 2011.  The Medicare Part B premium is increasing in 2011 due to possible increases in Part B costs.

There has been a lot of press about Social Security recently, including deficit reduction proposals, a withholding tax holiday, borrowing from the trust fund, raising the full retirement age, tying retirement benefit payments to income, increasing the income withholding cap, and plenty of other ideas.  While we cannot keep you up-to-date in this quarterly publication, we will try to post relevant information on the Empire Justice Center website (www.empirejustice.org) and on the DAP list serv.