2020 Medicare premium hike could wipe out Social Security COLA for many retirees

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2020 Medicare premium hike could wipe out Social Security COLA for many retirees | BenefitsPRO

If The Senior Citizens League is correct in its forecasts — and it has a strong record of that — roughly half of the Social Security cost-of-living adjustment (COLA) for 2020 for the average retiree will be wiped out by the increase in Medicare Part B premiums that year.

Based on its analysis of the recent Medicare Trustees Report, the league expects that the Medicare Part B premium, which pays for outpatient medical services and supplies such as doctor visits and medical equipment, will increase $8.80 per month, or 6.5%. It’s forecasting a 1.2% COLA for Social Security, based on future projections of Consumer Price Index data available through March, which for the average beneficiary collecting $1,461 a month amounts to roughly $17.50.
 
Why social security cost-of-living adjustments may be lower in 2021

The reason for the lower increase has a lot to do with the consumer-price index, which has suffered due to the plummet in oil prices amid the coronavirus pandemic.

“What’s going on in the first quarter is, primarily, gasoline prices plunged,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League. “That’s driving it down because the gasoline is weighted more heavily for the CPI-W and that drives down the COLA.”

Adding to the beneficiaries’ instability is the fact that the COVID-19 pandemic has affected the elderly especially hard and also caused the price of many consumer goods, like eggs, meat and milk, to rise to new heights.

The exact cost of living adjustment for 2021 won’t be known for five more months as the Social Security Administration isn’t expected to reveal the new COLA rate until October.
 
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