Zero COLA means no increase for your Medicare Premium
By Staff Writer
Under Social Security rules, some 70 percent of Medicare beneficiaries will not get increases when the cost of living adjustment in Social Security is zero.
CNN Money reported that low inflation means no Social Security increase this year. This, however, means that there won't be hikes in the Medicare premiums of retirees. This leaves 16.5 million people shouldering the increase for Medicare Part B. These people will experience a 52 percent increase.
CNN Money continues to explain that if an individual's Medicare part B is deducted directly out of the Social Security check, there is a high probability that the amount will be the same in the following year, which is roughly $105 a month. That is because of the Social Security rule that protects recipients when their COLA amount to zero.
According to Money there won't be any Social Security COLA in 2016. This leaves the benefits of 65 million people in the same amount next year. It is the third time it happened since 2010. The decision to have no COLA this year is due to the changes in consumer prices for employees based on the CPI-W index.
The Bureau of Labor and Statistics reported Thursday that prices for 2015's third quarter were lower compared to the same period last year, ruling out COLA for 2016. Zero COLA also means the wage cap is subject to Social Security payroll taxes, which will still be at $118,500 in 2016.
According to PBS NewsHour the COLA would typically permit Medicare to collect higher Part B premiums while letting the net Social Security benefits increase. With zero COLA, however, there will be no Part B premium increases for people who are considered harmless based on the Social Security's "hold harmless" rule.
Now, there have been discussions in the Congress along with Medicare to lessen the impact of Part B increases, but nothing has been done so far. With open enrollment and zero COLA, Medicare is in hot water and is expected to announce immediately the Part B costs for next year.