Mar 16, 2009

No Negative COLA

From the Wall Street Journal:
This year, we are likely to experience very low inflation or deflation, which got me wondering how Social Security benefits are adjusted in such an environment. ...

If there is deflation, Social Security benefits won't be cut, Mr. [Mark]Lassiter [a spokesperson for Social Security] says.
I am glad to see some definite word on this. I was not expecting a negative adjustment, but the statute is not crystal clear on the point.


Diane Owens said...

While there will not be a negative adjustment of Social Security benefits based on deflation, it is possible that there will be no COLA increase next year if the CPI-W in the 3rd qtr. of 2009 is lower than the CPI-W was in the 3rd qtr. of 2008.

See my blog post at "Social Security for Boomers for more on this issue.

Anonymous said...

"If there isn't any cost-of-living adjustment -- and if you are currently receiving Social Security, are already entitled to Medicare Part B, and aren't subject to an income-related surcharge for Part B premiums -- by law your Social Security benefit can't be reduced, even if Part B premiums increase"

HI 01001.004 The Variable SMI Premium

So where does that leave Medicare Part B if most people aren't paying the full premium, since the premiums are used to finance the program.