Posted on 10/10/2015 2:02:00 AM PDT by JoeProBono
The annual cost - of - living adjustment (COLA) to Social Security benefits will likely be zero in January 2016.
The COLA will be announced on Oct. 15, when the last data required to compute it becomes available. But the data already suggest that prices have fallen over the past 12 months, removing the need for an adjustment. If prices have fallen but the COLA is zero, the purchasing power of Social Security benefits would increase.
The Social Security Administration determines the COLA based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) compiled by the Bureau of Labor Statistics. This index is different from the Consumer Price Index for all Urban Consumers (CPI-U), which is the widely reported measure of inflation. Most years, the two indexes track each other closely, but not this year. In the 12 months to August 2015, the CPI-W fell 0.3 percent, but the CPI-U increased 0.2 percent. The falling price of motor fuel had a larger impact on the CPI-W than on the CPI-U, causing the disparity. With small overall changes in the indexes this year, this difference matters.
We expect that once the final data are released, the change in the CPI-W will be negative and the COLA will be zero. When prices drop, the law stipulates that the COLA should be zero. This happened in 2010 and 2011 (see chart).
Does COLA compensate retirees adequately?
The intent of the automatic COLA is to compensate Social Security recipients when the purchasing power of their benefits falls due to rising prices. If prices fall, on the other hand, the purchasing power of benefits increases, making a zero COLA more than sufficient. But is CPI-W, the index that underlies the COLA, the right measure of the prices faced by retirees?
The CPI-W reflects the prices of goods and services purchased by a typical household of urban wage earners. This demographic covers about 28 percent of total U.S. population. In the past 12 months, these prices have dropped, driven mainly by falling energy costs. Over this period, gasoline prices fell more than 20 percent and energy costs overall fell 15 percent.
Retirees have different spending patterns than urban wage earners. For example, they consume more medical care but spend less on education and gasoline than urban wage earners. In an ideal world, the Social Security COLA would be based on an index that reflects the spending pattern of retirees. Such an index does not exist.
The closest we can come is an experimental Consumer Price Index for Americans 62 year of Age and Older (CPI-E), which the BLS has compiled since the early 1980s. This demographic group does not match retirees exactly, since many people in their 60s still work. In the 12 months to August, the CPI-E increased 0.65 percent. If we take this as an approximation of the price increase faced by retirees, a zero COLA would not fully compensate them. In the past, the COLA fell short of the change in the CPI-E in some years and exceeded it in others.
There is yet another way to look at prices that are relevant for Social Security recipients. Imagine a person who relies on Social Security benefits to cover only daily expenses – food, utilities, phone bill, cleaning supplies, gasoline, prescription drugs, and the like. Other major expenses (such as housing, major purchases, a car, etc.) are taken care of from some other source. The house might be paid off, eliminating monthly mortgage payments. For such a person, the purchasing power of Social Security benefits depends on how much the prices of everyday goods and services changed over the year. AIER has a measure that reflects this – the Everyday Price Index (EPI).
Over the 12 months to August, the EPI fell 2.8 percent, driven mainly by the fall in fuel prices. Using this measure, a zero COLA would more than compensate people who use Social Security benefits to cover the costs of everyday products...................
And if this happened during Bush? And those last two times? Will there be pictures by the Demo-rats showing grannie being pushed down the stairs in her wheelchair?
Are government workers getting raises or COLA?
Alpo or Gravy Train? Tough choices ahead...
Big Price Hikes Coming For Medicare Premiums In 2016
MSN.com ^ | 14 August 2015 | Martha Lynn Craver
http://www.freerepublic.com/focus/f-news/3325331/posts
The actual rates for Part B (which covers the costs of doctor visits and outpatient care) will be announced in October and take effect Jan. 1. The boost may be 15% for all participants [$105/month to $121] or a whopping 52% for some [$105/month to $159], depending on whether Social Security recipients see a cost-of-living raise for 2016.
Socialist security tightening that belt around your stomach and that noose around your neck. Built on the backs of dead Americans and the money confiscated from them and we the living. Enjoy them golden years until government-care death panels decide your existence is too costly. Carry that debt weight to the end. Stay healthy my FRiend.
https://www.youtube.com/watch?v=uvwz1LBbvkA
But all the welfare queens have to do is have another child - instant more money. Foist them off on the schools for breakfast, lunch, and dinner.
Means Ret. Military won’t get one either. Since we both are over 65, he is Ret. SCPO, even if I used the just as costly Commissary for food, We’d still have to eliminate or RATION a lot of fresh foods and beef, some pork, cereals, eggs, milk as these are the food groups that have risen the most.
It is only because gas has gone down we have made the past few months with out extreme rationing. As both of us have had more than usual medical trips we’ve had to make. And since we live in the boonies it takes a 60-90 min round trip drive for a doctor’s visit or testing. Only thing we have close is a Rehab place. Refuse to use a GP as they have snot nosed sick kids in their waiting rooms that don’t know what a Kleenex is or to cover their mouths when they cough. They touch every thing with their germ infested hands.
I love kids, BUT I also raised them and know that they are a big spreader of germs once school starts, along with bringing home Lice they didn’t have when they went to school. DUH, try a head inspection as they walk in the door, turn away those that are infested to be treated before they come back to school would cut that issue down.
No COLA increase means the Part B premium cannot increase (by law, IIRC).
The Medicare Advantage I have will go from $0 monthly premium to $10. The primary care doctor copay will reduce from $12 to $6. Drugs are $0 deductible, except next year, there will be a $175 annual deductible for certain non-generic speciality drugs.
A couple of other plans through other insurance companies have $0 premiums, but my primary care physicial is not on either of their provider lists.
Since I regularly see my PCP 4 times per year, these new 2016 numbers will cost me a total of about $100 for next year.
Typically, when COLAs do happen, the Medicare Part B premium increases to eat up about 1/3 to 1/4 of the increase.
Don’t want us old folk gettin’ a whole big increase and overrunning the stores to spend it on frivolous stuff like food.
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LOL!
The biggest part of our budget is health insurance and given the 22% increases they are already talking about, it would mean our healthcare will be over half our income. That they say there is no inflation is a lie that everyone can recognize.
The refrigerator maybe empty, but the stack of lottery tickets they bought is staggering. I propose a modest increase in SS coupled with the recipients being banned from stepping foot in any casinos.
He drives just as fast, in the left lane, on the interstate.
Thx ...
The Medicare Advantage I have will go from $0 monthly premium to $10. The primary care doctor copay will reduce from $12 to $6. Drugs are $0 deductible, except next year, there will be a $175 annual deductible for certain non-generic speciality drugs.
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My secondary insurer is my former employer. I pay around $275 per month for secondary coverage. it wouldn’t be nearly that expensive but I have a wife and two minor children and my former employer is their primary insurer. Also, my former employer reimburses me for the Medicare premiums I pay.
I’m not complaining, on the whole, it’s a pretty good deal.
“Have not use Medicare yet and hope never to use it so I’m doing my part to help the future generations...”
Why not? Are you old enough for it?
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