Social Security Recipients Won’t Get Cost-of-Living Benefit Increase Next Year
For the third time in the last decade, social security recipients will not receive an annual cost-of-living adjustment increase next year.
The Labor Department announced Thursday that the Social Security Administration will not increase its payments to people who collect social security in 2016. The raises are tied to the consumer price index (CPI), which experts say has been flat due to soft inflation and falling gas prices. As a result, the official price measure used to calculate the annual living-cost adjustment dropped 0.4 percent from last year's third quarter level, stated the Labor Department, according to The Wall Street Journal.
Because there will not be a cost-of-living bump in 2016, this will trigger a "hold harmless" provision that prevents Medicare premiums from rising for about 70 percent of beneficiaries, reports USA Today. Although they will continue to pay their existing monthly premiums of $104.90, this means that the other 30 percent of beneficiaries will have higher medical costs. This also includes new enrollees, people who don't receive Social Security benefits and enrollees who earn more money. According to federal estimates calculated in July, those monthly premiums would jump by 52 percent to $159.30.
The lack of inflation also means there won't be an increase in the amount of wage income, which currently stands at $118,500, subject to payroll taxes.
Next year will mark the third time that there has been an absence of a yearly social security increase for recipients within the last 40 years. The other times this occurred were in 2010 and 2011.
As of October, roughly 65 million retired and disabled workers, spouses and children collect Social Security benefits each month. Another 15 million are disabled veterans, federal retirees and their survivors, and those on Supplemental Security Income.
Although the average monthly Social Security check is $1,224, many American households depend on Social Security as their primary source of income. According to the Census Bureau, about 26 million more people would have become poverty stricken without the monthly checks in 2015.
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