No Social Security Cost of Living Increase Expected in 2010

For the first time in more than three decades, Social Security beneficiaries will not get any increase in their benefits next year, according to forecasts from the Obama Administration and Congressional Budget Office. This will affect over 49 million Americans receiving Social Security benefits nationwide, 4.5 million of whom live in California.

Social Security typically increases benefits annually to keep up with rising prices of consumer goods. This year, in 2009, the increase was 5.8%, and beneficiaries have received an automatic increase every year since 1975. The current economic recession, however, coupled with other factors such as decline in energy prices, has resulted in low inflation, which likely will result in the lack of a cost-of-living increase for at least the next two years, possibly three. The Obama Administration and CBO estimate a modest 0.8-1.4% increase for 2013.

Federal law mandates that most Social Security beneficiaries cannot have their Medicare Part B premiums increase by more than the dollar amount of the cost-of-living increase in their Social Security checks. Since there will be no COLA increase, about 75% of Medicare beneficiaries’ Part B premiums will remain the same ($96.40) for 2010.

However, about 25% of Medicare beneficiaries are not protected by this law and could see their premiums increase. CBO estimates the basic premium will rise to $119 next year, $123 in 2011 and $128 in 2012 for those not protected by the law. Beneficiaries who aren’t protected by this law include:

  • New enrollees in Part B (because they did not have the premium withheld from their Social Security benefit in the prior year),
  • Higher-income enrollees who are subject to an income-related premium (see our chart on Part B Premiums for more info), and
  • Individuals who do not have the Part B premium withheld from their Social Security checks, nearly all of whom have their premiums paid by Medicaid (Medi-Cal in California).

In addition, millions of beneficiaries also may experience higher premiums for drug coverage under Medicare Part D because there are no laws that prevent such an increase. If such an increase in Part D premiums does occur, beneficiaries will see their Social Security checks reduced for the first time.

For more information, see the following articles from the Congressional Budget Office (CBO):

Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.