No Social Security COLA for 2016

Medicare Rates May Increase for Some Retirees

OCTOBER 9, 2015: A flat Consumer Price Index (CPI) means there will be no COLA increase under Social Security for 2016. The CPI-W is the federal standard used to calculate inflation.

Since 1987, a national debate has raged as to whether or not the CPI-W is an accurate gauge for retirees. Many, including our Association, feel a more accurate measure is the CPI-E (Elderly), which looks to inflationary pressures such as healthcare costs that impact retirees on a larger scale.

Federal law dictates that when no COLA is paid by Social Security, Medicare enrollees (enrolled as of December 31, 2015) shall not receive an increase in their Part B premium for the year in question. However, this only applies to those Medicare enrollees whose Part B premium is withheld from their monthly Social Security check.

For enrollees directly paying Medicare premiums via check or direct deposit or paying a surcharge, Part B premiums can and will increase come January 2016. Retirees enrolling in Medicare after December 31, 2015 will also pay the new Part B premium.

Of great concern to our Association and a growing number of federal officials is the fact that any increase in the Medicare Part B premium will be entirely borne by this small group of enrollees who are either direct payers, surcharged or new enrollees. Existing Medicare Enrollees with Social Security withholdings will continue to pay the same $104.90 (basic rate) that they paid in 2015.

For those paying the higher rate, Part B costs could escalate dramatically in January. By law, Medicare covers 75% of the cost of Part B, while the enrollees pay 25% (standard rate based on income). However, with 70% of all Medicare enrollees exempt from paying higher rates in 2016, the remaining non-exempt retirees will pay for any cost increase. This could result in the basic Part B premium climbing as high as $150 a month and for surcharged enrollees much higher.

Congressional Action

Next year marks only the 3rd time since 1965 that no Social Security COLA will be paid. The other two occurrences took place in 2010-2011, in the wake of the Great Recession.

In 2011, we reported on a bill sponsored by then US Senator John Kerry that would have protected those Medicare enrollees facing an unfair increase in their Part B premium. Unfortunately, the bill could not garner the support need to pass Congress at that time.

Now, with Part B premiums set to dramatically increase come January 1, a growing number of US Senators are poised to act. Senator Ron Wyden (D-OR) has 22 Senate Cosponsors on S.2148, a bill that would hold all Medicare enrollees harmless from a Part B increase in 2016.

The bill was filed this Wednesday, October 7th. Association officials have requested US Senators Elizabeth Warren and Ed Markey cosponsor the bill.

“We anticipate having the full support of both Senators Warren and Markey, along with our nine members of the House. This is an issue that disproportionately impacts Massachusetts retirees and is greatly unfair,” said Association Legislative Director Shawn Duhamel. “Our federal delegation is very much in tune with the issues that impact public retirees. We have a great working relationship with all 11 members and anticipate their help in resolving this issue.”

With less than three months remaining in 2015, members who would be impacted by the increase in Part B premiums should pay close attention to Association communications. The November edition of the Voice contains a more detailed explanation of the law.