WASHINGTON — Millions of Social Security recipients and federal retirees will get a 0.3 percent increase in monthly benefits next year, the fifth year in a row that older Americans will have to settle for historically low raises.
There was no increase this year. Next year's benefit increase will be small because inflation is low, driven in part by lower fuel prices.
The federal government announced the cost-of-living adjustment, or COLA, Tuesday morning. By law, the COLA is based on a government measure of consumer prices.
The COLA affects more than 70 million people — about 1 in 5 Americans.
The average monthly Social Security payment is $1,238. That translates into a monthly increase of less than $4 a month.
[GRAPHIC: Interactive data show cost-of-living increases, more]
More bad news for seniors: Medicare Part B premiums, which are usually deducted from Social Security payments, are expected to increase next year to the point in which they will probably wipe out the entire COLA.
By law, the dollar increase in Medicare's Part B premium cannot exceed a beneficiary's cost-of-living raise. That's known as the "hold harmless" provision, and it protects the majority of Medicare recipients.
But another federal law says that the Part B premium must raise enough money to cover one-fourth of expected spending on doctors' services. That means that a minority of beneficiaries, including new enrollees and higher-income people, have to shoulder the full increase. Their premiums would jump.
Millicent Graves, a retired veterinary technician, says Medicare and supplemental insurance premiums eat up nearly a third of her $929 monthly Social Security payment. And don't tell the 72-year-old from Williamsburg, Virginia, that consumer prices aren't going up. She says her insurance premiums went up by $46.50 this year, and her cable TV, Internet and phone bill went up, too.
"I just lose and lose and lose and lose," Graves said.
More than 60 million retirees, disabled workers, spouses and children get Social Security benefits. The COLA also affects benefits for about 4 million disabled veterans, 2.5 million federal retirees and their survivors, and more than 8 million people who get Supplemental Security Income, the disability program for the poor. Many people who get SSI also receive Social Security.
Since 2008, the COLA has been above 2 percent only once, in 2011. It's been zero three times.
Read Wednesday's Arkansas Democrat-Gazette for full details.