Monthly Social Security Benefits Will Not Increase in 2016
Barry Weller
The Social Security Administration announced there will be no cost of living adjustment in benefit checks for 2016. The Social Security Act allows for an automatic increase in benefits if there is an increase in inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers. In January of 2015, most recipients saw the gross amount of their benefit checks increase by 1.7%. This will not be the case in January 2016. The cost of living adjustment (COLA) is calculated by the change in CPI-W from the third quarter of the previous year through the second quarter of the current year. The Bureau of Labor Statistics determines if there is an increase in the consumer price index. Then in October each year, the SSA announces what COLA percentage, if any, social security beneficiaries will receive for the next year.
Other changes to monthly Social Security benefit checks include a reduction for the cost of Medicare premiums. Medicare Part B (medical insurance) premiums for 2016 have not yet been calculated. Should there be an increase in these premiums, the majority of Social Security beneficiaries will be protected from paying the higher Part B by a "hold harmless" provision in the law. The purpose of this provision to avoid reducing net Social Security benefit checks when the COLA is zero. However, not all Social Security beneficiaries are protected by this provision. You are not protected from the higher premiums if you are newly entitled to Part B in 2016. You are also not protected if you are a higher income beneficiary subject to an income-adjusted Part B in 2016.
(updated 10/27/2015)