Social Security beneficiaries might finally get a modest increase for cost of living next year—after two years of no COLA increases, but that raise is going to be offset by rising Medicare premiums.
About 45 million people—one in seven in the country—receive both Medicare and Social Security. By law, beneficiaries have their Medicare Part B premiums, which cover doctor visits, deducted from their Social Security payments each month.
When Medicare premiums rise more than Social Security payments, millions of people living on fixed incomes don't get raises. On the other hand, most don't get pay cuts, either, because a hold-harmless provision prevents higher Part B premiums from reducing Social Security payments for most people.
David Certner of AARP estimates that as many as three-fourths of beneficiaries will have their entire Social Security increase swallowed by rising Medicare premiums next year.
It's a tough development for retirees who lost much of their savings when the stock market collapsed, who lost value in their homes when the housing market crashed and who can't find work because the job market is weak or they are in poor health....
Medicare premiums are absorbing a growing share of Social Security benefits, leaving retired and disabled people with less money for other expenses, according to a report by the Congressional Research Service.
Social Security recipients spend, on average, 9 percent of their benefits on Medicare Part B premiums, plus 3 percent on premiums for the Medicare prescription drug program. By the time someone retires in 2078, he or she will spend nearly one-third of their benefits on premiums for both Medicare programs, the report said.
With food and energy prices rising, and prescription drug prices following, life is going to be very tough for the nation's seniors for the next several years. Dday has it right, this is essentially a cut in Social Security, what congressional Dems say they are fighting against. As Social Security benefits stay mostly stagnant, and Medicare costs continue to rise, seniors and the disabled are gong to be caught in a cycle where they have less and less to live on.
One of the failings of the Affordable Care Act, while it did achieve cost savings for Medicare, is that much of those savings were achieved by shifting costs onto beneficiaries, rather than actually getting at the heart of rising costs. The cost drivers—hospitals, the drug industry, device manufacturers—were mostly left out of the equation, and these systemic problems are still out there. And seniors and the disabled will bear the brunt of it.