Social Security Benefits: A Few Key Specifics On Cost Of Living Adjustment 2011

Social Security Benefits: A Few Key Specifics On Cost Of Living Adjustment 2011

For the second year in a row people who depend on Social Security wont receive a cost of living raise. This is only the 2nd time since the cost of living adjustment (COLA) was implemented that receivers haven't received an increase.

The reason Social Security benefits wont be adjusted in 2011 is that inflation was very low. The whole premise behind the cost of living adjustment is that benefits are revised for inflation thus receivers could sustain rising prices. If there is no inflation, there is no need for cost of living increase. The latest inflation numbers published by the Labor Department indicates that prices are lesser than they were in 2009, the last time Social Security benefits were raised.

The cost of living adjustment in 2009 was the biggest seen in 27 years at 5.8%. The increase in 2009 was very large due to gas prices that sky-rocketed in summer of 2008. When gas prices decreased, so did the in general inflation rate. While the government can not reduce Social Security benefits if there's deflation (when prices are dropping), they could decide to not provide a cost of living adjustment raise, that was the situation for 2010 and looks to be for 2011.

Possible Extra Payment to Aid Seniors Who Depend on Social Security Benefits

To aid Seniors who depend on their Social Security benefits to help with living costs, Congress will be voting on a $250 incentive payment for Social Security receivers to aid make up for the fact that Social Security benefits will remain the same for the second year in a row. An update would be provided when the bill has been voted on.

No Social Security COLA Means No Raise in Medicare B Premiums

One silver lining to no cost of living raise is that Medicare Part B premiums wont increase for present enrollees. A little percent of Medicare Part B participants will pay higher fees, including people who've Medicare Part B but who're not yet collecting Social Security benefits, people who're considered "high income" and people who're just now enrolling in Part B. But, a "hold-harmless" facility protects existing participants from rate increases if their Social Security benefits do not increase, thus no cost of living raise for Social Security recipients also means no Medicare Part B premium raise also.

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