Anyone who pays close attention to Social Security retirement benefits knows that the annual Social Security cost-of-living adjustment (COLA) only tells part of the story of how benefits are affected by inflation. The second part relates to changes in Medicare costs, which often cause COLA increases and give seniors less spending power.
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Each year, the Centers for Medicare and Medicaid Services (CMS) adjusts Medicare Part B premiums, deductibles and coinsurance rates in accordance with provisions of the Social Security Act, the agency said on its website. Sometimes those premiums go down and sometimes they go up – and in 2024, they’re going up.
Last week, CMS announced that the standard monthly premium for Medicare Part B enrollees will be $174.70 in 2024, an increase of $9.80 from 2023, or 6%. The annual deductible for all Medicare Part B beneficiaries will increase to $240 in 2024. $226 in 2023.
The increase in standard Part B premiums for 2024 follows a decline to $5.20 a month in 2023, USA Today reports. This year’s decline was largely due to lower spending on the Aduhelminary Alzheimer’s drug and other health care costs. But projected increases in health care spending will push 2024 Part B premiums higher.
The Medicare changes were announced the same day the Social Security Administration said the 2024 Social Security COLA will be 3.2%. The 2024 COLA represents a steep decline from this year’s 8.7% increase, which was the highest in more than four decades, but still well above the average of 2.6% over the past 20 years.
A COLA of 3.2% would add an additional $57.35 per month to the average Social Security retirement benefit, up from $1,792.37 per month by August 2023. This is a significant decline from the average monthly increase of approximately $146 based on the 2023 COLA.
Many Social Security recipients will not even receive the full COLA next year due to higher Medicare Part B premiums, which are automatically deducted from Social Security payments each month. Experts say the Medicare changes won’t eliminate the high COLA entirely, but they will reduce it enough to pose financial challenges for many beneficiaries.
Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, called the 2024 COLA “very good news for beneficiaries,” but she said Medicare premium increases “will absorb a disproportionate share of the increase,” according to AARP. gave information
“Elderly and disabled people spend a larger share of their income on health care, and Medicare prices are rising faster than overall inflation,” Romig said.
This has been a common theme of senior advocacy groups – the inability of the annual COLA calculation to adequately cover senior health care costs and increasing Medicare premiums and deductibles.
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One of those advocacy groups is the Senior Citizens League (TSCL), which has long supported changing the formula used to determine COLA. The formula is currently based on third quarter inflation, measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
TSCL would prefer to base it on the Consumer Price Index for the Elderly (CPI-E), which puts more emphasis on health care and other costs affecting older Americans.
“If this were law today, the COLA in 2024 would be about a percentage point higher — 4%, compared to the 3.2% currently announced by the Social Security Administration,” Mary Johnson, TSCL’s Social Security policy analyst, said in an October report. .13 Press Release.