Ben­e­fit re­cip­i­ents to get tiny in­crease

Ad­just­ment will likely be negated by hike in Medi­care pre­mi­ums

Daily Local News (West Chester, PA) - - BUSINESS - By Stephen Oh­lemacher The As­so­ci­ated Press

Mil­lions of So­cial Se­cu­rity re­cip­i­ents and fed­eral re­tirees will get a 0.3 per­cent in­crease in monthly ben­e­fits next year, the fifth year in a row that older Amer­i­cans will have to set­tle for his­tor­i­cally low raises. The ad­just­ment adds up to a monthly in­crease of less than $4 a month for an av­er­age re­cip­i­ent.

The cost-of-liv­ing ad­just­ment, an­nounced by the gov­ern­ment Tues­day, will af­fect more than 70 mil­lion peo­ple — about 1 in 5 Amer­i­cans. For re­cip­i­ents, the av­er­age monthly So­cial Se­cu­rity pay­ment now is $1,238.

Un­for­tu­nately for some se­niors, even the small in­crease will prob­a­bly be wiped out by an ex­pected in­crease in Medi­care Part B pre­mi­ums, which are usu­ally de­ducted from So­cial Se­cu­rity pay­ments.

By law, ris­ing pre­mi­ums for most Medi­care re­cip­i­ents can­not ex­ceed their So­cial Se­cu­rity costof-liv­ing in­crease. That’s known as the “hold harm­less” pro­vi­sion. How­ever, new en­rollees and high­in­come re­tirees are not cov­ered by that pro­vi­sion, so they could face higher Medi­care pre­mi­ums, which will be an­nounced later this year.

There was no So­cial Se­cu­rity ben­e­fit in­crease this year, and next year’s will be small be­cause in­fla­tion is low, driven in part by cheaper fuel prices. The low in­fla-

tion rate should help keep some older folks’ bills from ris­ing very rapidly.

Don’t tell that to Mil­li­cent Graves, a re­tired vet­eri­nary tech­ni­cian, who says Medi­care and sup­ple­men­tal in­sur­ance pre­mi­ums eat up nearly a third of her $929 monthly So­cial Se­cu­rity pay­ment. The 72-year-old from Wil­liams­burg, Vir­ginia, says her in­sur­ance pre­mi­ums went up by $46.50 this year, and her ca­ble TV, in­ter­net and phone bill went up, too.

“I just lose and lose and lose and lose,” Graves said.

More than 60 mil­lion re­tirees, dis­abled work­ers, spouses and chil­dren get So­cial Se­cu­rity ben­e­fits. The COLA also af­fects ben­e­fits for about 4 mil­lion dis­abled

vet­er­ans, 2.5 mil­lion fed­eral re­tirees and their sur­vivors, and more than 8 mil­lion peo­ple who get Sup­ple­men­tal Se­cu­rity In­come, the dis­abil­ity pro­gram for the poor. Many peo­ple who get SSI also re­ceive So­cial Se­cu­rity.

Since 2008, the COLA has been above 2 per­cent only once, in 2011. It’s been zero three times.

“This loss of an­tic­i­pated re­tire­ment in­come com­pounds ev­ery year, caus­ing peo­ple to spend through re­tire­ment sav­ings far more quickly than planned,” said Mary John­son of the Se­nior Cit­i­zens League. “Over the course of a 25- or 30-year re­tire­ment, it re­duces an­tic­i­pated So­cial Se­cu­rity in­come by tens of thou­sands of dol­lars.”

The cost-of-liv­ing ad­just­ment is based on a broad mea­sure of prices gen­er­ated by the Bureau of La­bor Sta­tis­tics. It mea­sures price changes for food, hous­ing, cloth­ing, trans­porta­tion, en­ergy, med­i­cal care, recre­ation and ed­u­ca­tion.

If prices go up, ben­e­fits go up. If prices drop or stay flat, ben­e­fits stay the same.

Gaso­line prices have fallen by more than 6 per­cent over the past year, ac­cord­ing to the Septem­ber in­fla­tion re­port, while the cost of med­i­cal care has gone up by more than 5

per­cent.

For se­niors who don’t drive much, they don’t get the full ben­e­fit of low gas prices, said Max Gulker, a se­nior re­search fel­low at the Amer­i­can In­sti­tute for Eco­nomic Re­search. Many se­niors spend more of their in­come on health care.

Graves said she ap­pre­ci­ates lower gas prices, but the higher med­i­cal costs are a prob­lem.

“I just have to rely more each month on cash­ing in in­vest­ments,” Graves said. “I’m lucky I can do that.”

Demo­cratic pres­i­den­tial nom­i­nee Hil­lary Clin­ton has em­braced the idea of ex­panded ben­e­fits for cer­tain low-in­come re­tirees. She says the na­tion would pay for it by rais­ing taxes on “the high­est-in­come Amer­i­cans.”

Break­ing with other Repub­li­cans, GOP nom­i­nee

Don­ald Trump has pledged not to cut ben­e­fits. How­ever, he has of­fered few specifics on how he would ad­dress So­cial Se­cu­rity’s longterm fi­nan­cial prob­lems.

So­cial Se­cu­rity is fi­nanced by a 12.4 per­cent tax on the first $118,500 of a per­son’s an­nual wages, with the worker pay­ing half and the em­ployer pay­ing the other half. The amount of wages sub­ject to the pay­roll tax will go up to $127,200 next year, the So­cial Se­cu­rity Ad­min­is­tra­tion said.

About 173 mil­lion work­ers will pay So­cial Se­cu­rity taxes next year — about 12 mil­lion of them will face higher taxes be­cause of the higher cap, the agency said.

On­line: So­cial Se­cu­rity In­ter­ac­tive: http://hosted.ap.org/ in­ter­ac­tives/2015/so­cialse­cu­rity/

THE AS­SO­CI­ATED PRESS

The So­cial Se­cu­rity Ad­min­is­tra­tion’s main cam­pus is seen in Wood­lawn, Md. Mil­lions of So­cial Se­cu­rity re­cip­i­ents and fed­eral re­tirees will get only tiny in­creases in ben­e­fits next year, the fifth year in a row that older Amer­i­cans will have to set­tle for his­tor­i­cally low raises.

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