Recipients of Social Security income will have to get by with their current benefits for the foreseeable future.
In May 2009, White House officials and the Congressional Budget Office suggested that beneficiaries of Social Security benefits will not receive cost-of-living adjustments (COLA) 2010 or 2011.
The move comes in contrast to a precedent which has seen increases every year since 1976. Increases are based on a formula established by law. In 2009, for example, COLA increases accounted for a 5.8 percent bump.
Many older Americans are already reeling from the impact of falling stock prices, rising healthcare costs and a turbulent real estate market. Now they have no choice but to tighten the belt until 2012.
A benefits freeze means that roughly 25 percent of Social Security recipients will face an increase in their Medicare Premiums. Federal law prevents premiums increases for Medicare Part B from exceeding COLA dollar amounts for only 75 percent of recipients.
Premiums for Medicare Part B patients are expected to rise over the next two years:
- 2009 Medicare Part B Premium: $96.40
- 2010 Medicare Part B Premium: $119 (predicted)
- 2011 Medicare Part B Premium: $123 (preducted)
Millions more could face higher premiums for prescription drug coverage under Part D.
The recession is also affecting Medicare's hospital insurance trust fund, which is funded through payroll tax. As businesses shed employees, or replace highly paid workers woth lower-paid workers, the fund is being depleted.
Officials with the Congressional Budget Off expect inflation to remain low for several years. A 1.4 percent increase in Social Security benefits is scheduled for 2012.
More than 50 million Americans receive Social Security benefits. The safety net system insures some form of income for every older American, based on his or her contributions made during working years.
As the so-called Baby Boom generation passes into its golden years, however, many analysts wonder whether the Social Security system can remain solvent. With fewer workers paying into the system, the federal government might have no choise but to adjust either contributions or distributions to make up the difference.
If you believe you're entitled to Social Security or Disability benefits, you might want a legal professional to help you through the process.
If you'd like to file an application or an appeal, contact the Social Security Disability attorneys at Keller & Keller. One of our qualified disability analysts can speak with you about your case.