No Social Security Boost for Seniors This Year
By JOHN M. BERRY,
Posted: September 17, 2010
Consumer prices rose 0.3 percent last month, the Labor Department reported today, virtually guaranteeing that Social Security recipients, for the second year in a row, won't get a cost-of-living (COLA) increase in 2011.
The CPI for urban wage earners and clerical workers, the index on which COLAs are based, is higher than it was a year ago, but it's nevertheless lower than it was in the third quarter of 2008. The index must exceed that previous third-quarter high before a COLA is paid.
The issue of a COLA won't be determined until the September CPI is available next month. But it would take a huge one-month jump in prices--of which there's no sign now--to generate even the tiniest COLA for next January.
Last year seniors got a very large 5.8 percent COLA after energy prices soared in 2008. Energy prices then fell, while the bursting of the housing price bubble has held down the cost of shelter, a major component of the index.
There is a silver lining for most seniors, however. In the absence of a COLA, premiums for Part B of Medicare--the part covering doctors' fees, tests and outpatient treatments--cannot rise except for couples with adjusted gross incomes of under $170,000 and individuals with an AGI of less than $85,000.