With roughly 70% of Medicare beneficiaries held harmless, that means the squeeze will be felt that much more strongly by the rest.
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Sanders has proposed increasing Social Security benefits, cost-of-living adjustments and minimum benefit levels, to be paid for by scrapping a ceiling on the amount of income considered taxable for Social Security.
The adjustment now happens annually and is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
But that index is geared for spending by younger consumers and underestimates the type of price inflation experienced by seniors, mainly due to increases in health-care costs, according to The Senior Citizens League, a nonpartisan advocacy group.
The Social Security Administration told almost 65 million retirees on Monday they will not be getting a raise next year, because inflation is too low to trigger one. However, in this case the state will have to pay the increased premiums not the recipient. And because there is no cost-of-living increase for Social Security recipients this year, millions of dual-eligible beneficiaries won’t have an extra cushion to pay for higher premiums.
Medicare Part B premiums could increase more than 50 percent for a few beneficiaries because of quirk in federal law. Premium income has to cover 25% of the cost of Part B. When the COLA is less than the increase in Part B costs – and it consistently has been, with annual Part B costs increasing 5.3% over the past five years while inflation has stayed below 2% – a few other group of Medicare beneficiaries has to cover a larger share than the group that’s held harmless.
Their premiums could jump by about $54 a month, to $159. During this time, beneficiaries can pick a new Medicare Part D drug plan, a new Medicare Advantage plan, or switch from original Medicare (coverage managed by the federal government) into a Medicare Advantage plan (coverage managed by private health plans that contract with Medicare) or vice versa. But Part B premiums are based on the beneficiary’s income, so seniors of greater means pick up more of the tab than their less wealthy peers. If the CPI-W doesn’t increase during the third quarter of the year compared with the same period the previous year, no adjustment is made to benefits. This measurement would cause the rate at which benefits rise to be slower than if using the CPI-W, because it reflects the substitutions that consumers make in response to rising prices of certain goods. The numbers show that gasoline prices are down by 30 percent from previous year.
“Don’t depend on the government”, said 66-year-old retiree Janet Rothenberg.
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“The formula also calculates future living-cost adjustments from the highest price level from the third quarter of any year, which requires looking back to the last year in which there was a living-cost adjustment”. Meanwhile, other prices have risen – but not by enough to offset the massive tumble of prices at the pump.
