Social Security Benefits: Several Important Facts On Cost Of Living Adjustment 2011


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

The reason Social Security benefits will not be revised in 2011 is that inflation has been too low. The whole premise behind the cost of living adjustment is that benefits are revised for inflation so recipients could keep up with increasing prices. If there's no inflation, there's no need for cost of living increase. The newest inflation numbers published by the Labor Department indicates that prices are lower than they were in 2009, the last time Social Security benefits were increased.

The COLA in 2009 was the biggest seen in 27 years at 5.8 percent. The raise in 2009 was so large because of gas prices that sky-rocketed in summer of 2008. When gas prices decreased, so did the overall inflation rate. While the government can't decrease Social Security benefits if there's deflation (when prices are reducing), they can choose to not provide a cost of living adjustment increase, which has been the situation for 2010 and looks to be the case for 2011.

Possible Extra Payment to Help Seniors Who Rely on Social Security Benefits

To aid Seniors who depend on their Social Security benefits to help with living expenses, Congress will be voting on a $250 bonus payment for Social Security recipients to aid make up for the fact that Social Security benefits will remain unchanged for second year in a row. An update will be provided once 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 will not go up for current enrollees. A little percentage of Medicare Part B participants will pay increased premiums, including people who have Medicare Part B but who're not yet collecting Social Security benefits, people who're considered "high income" and people who are just now enrolling in Part B. However, a "hold-harmless" provision protects existing participants from rate increases if their Social Security benefits don't raise, so no cost of living increase for Social Security recipients also means no Medicare Part B premium raise also.

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