For only the third time in the past four decades, there will be no cost of living increase adjustment (COLA) in Social Security and Supplemental Security Income (SSI) benefits in the New Year. The Bureau of Labor Statistics (BLS) reports a zero percent rate of inflation over the past 12 months, which translates to zero percent cost of living increases in benefit amounts. Social Security and SSI payments will remain unchanged in 2016 for the large majority of disabled individuals, veterans and retirees relying on these benefits for a sizeable part of their income.
The reduction in energy prices is the main reason that inflation rates have remained steady, but for those most affected by the lack of COLA in 2016, costs have definitely increased. Housing, food and medical care expenses have risen significantly in the past year, which means that many of those receiving Social Security and SSI benefits will feel the pinch in the coming months.
According to a report in a recent USA Today article, older Americans rely on Social Security for approximately 34% of their total income. Without a cost of living increase, the need to supplement incomes will drive many back into the workforce. The Social Security tax rate of 7.65% will also remain the same for 2016, as will the cap on taxable earnings for workers over age 66, which is currently $118,500. For those under the age of 65 who are working and receiving benefits, the cap on their earnings is set at $15,720.
What makes the sting of no cost of living increases worse is the potential for Medicare premiums to increase as much as 52% in 2016. Many older Americans will be forced to decrease their spending, sell their homes or look into reverse mortgages to make ends meet. Disabled veterans and individuals take an even harder hit if they cannot supplement their income because they are unable to work.
Legislators have been lobbying for the Social Security Administration to use a CPI that is geared to measure cost of living expenses specifically for the elderly and disabled. Researchers at the Center of Retirement Research at Boston College have found that the current CPI-W used to calculate COLA for Social Security recipients does not accurately reflect the spending patterns of the elderly or those on disability. An experimental CPI-E would use the spending patterns of the elderly and disabled to determine cost of living increases, taking into consideration the specific costs of healthcare and housing for these groups of people.
If you or someone you know is disabled and needs Social Security or Supplemental Security Income (SSI), the experienced Philadelphia Social Security Disability lawyers at Galfand Berger can help you claim the maximum benefits that you deserve. Call us at 800-222-8792 or complete our online contact form to schedule a consultation today. Our offices are located in Philadelphia, Reading and Bethlehem allowing us to serve clients throughout Pennsylvania and New Jersey.