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Social Security Benefits: Some Significant Details On Cost Of Living Adjustment
For the second year in a row people who rely on Social Security wont be receiving a cost of living raise. This is only the second time since the cost of living adjustment (COLA) was adopted that receivers have not received an increase.
The reason Social Security benefits wont be adjusted in 2011 is that inflation has been very low. The whole premise behind the COLA is that benefits are revised for inflation so receivers can sustain rising prices. If there's no inflation, there is no need for cost of living increase. The most recent inflation numbers published by the Labor Department indicates that prices are lower than they were in 2009, the last time Social Security benefits were increased.
The cost of living adjustment in 2009 was the largest seen in 27 years at 5.8%. The increase in 2009 was so large due to gas prices that sky-rocketed in the summer of 2008. When gas prices decreased, so did the overall inflation rate. While the government can't reduce Social Security benefits if there is deflation (when prices are dropping), they can decide to not give a cost of living adjustment increase, which was the case for 2010 and looks to be for 2011.
Possible Bonus Payment to Help Seniors Who Depend on Social Security Benefits
To help Seniors who depend on their Social Security benefits to help with living expenses, Congress will be voting on a $250 bonus payment for Social Security receivers to help make up for the fact that Social Security benefits will remain the same for the second year in a row. An update will be provided when the bill has been voted on.
No Social Security COLA Means No Increase in Medicare B Premiums
One silver lining to no cost of living raise is that Medicare Part B premiums will not go up for current enrollees. A small percent of Medicare Part B participants will pay higher premiums, including people who've Medicare Part B but who are not yet collecting Social Security benefits, people who're considered "high income" and people who are just now enrolling in Part B. However, a "hold-harmless" facility protects current participants from rate increases if their Social Security benefits do not increase, so no cost of living raise for Social Security recipients also means no Medicare Part B premium increase also.
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