For those closely monitoring Social Security retirement benefits, it’s evident that the yearly Social Security inflation adjustment, or COLA, only provides a partial perspective. The fluctuating costs of Medicare often counterbalance the COLA benefits, leading to reduced financial flexibility for the elderly. Annually, the Medicare & Medicaid Services Center (CMS) updates the premiums, deductibles, and co-payments of Medicare Part B, based on the stipulations in the Social Security Act, as per their official communication channels.
These premiums occasionally decrease, but for 2024, they’re on the rise. Recent disclosures by CMS revealed that the regular monthly premium for those on Medicare Part B will be set at $174.70 in 2024, marking a 6% increase, or $9.80, from the previous year. Additionally, the yearly deductible for Medicare Part B beneficiaries is set to increase to $240 in 2024 from the previous $226.
Social Security and Medicare Part B COLA Adjustments for 2024
Interestingly, 2023 saw a monthly reduction of $5.20 in the standard Part B premiums. This dip was largely due to underspending on the Aduhelm Alzheimer’s medication and other medical expenditures. However, forecasted hikes in healthcare costs will nudge the 2024 Part B premium upwards. On the very day these changes were made public, the Social Security Administration announced a 3.2% COLA for 2024. This is a significant reduction from the previous year’s 8.7% – the largest in over 40 years. However, it’s still considerably above the two-decade average of 2.6%.
This 3.2% COLA translates to an additional $57.35 monthly for the average Social Security retirement beneficiary, based on the August 2023 average benefit of $1,792.37. This is a marked decline from the average monthly hike of around $146 stemming from the 2023 COLA.
Many Social Security beneficiaries might not fully enjoy the upcoming COLA due to the increased Medicare Part B premium, which is routinely subtracted from Social Security disbursements. While the Medicare adjustments won’t nullify the COLA entirely, they will significantly diminish its impact, posing financial constraints for many recipients, as specialists indicate.
Kathleen Romig, spearheading Social Security and disability policy initiatives at the Center on Budget and Policy Priorities, acknowledged the COLA as a positive development for beneficiaries. However, she emphasized the disproportionate erosion caused by the Medicare premium surge, as highlighted by AARP.
Romig pointed out, “Elderly individuals and those with disabilities usually allocate a larger portion of their income towards healthcare, especially as healthcare costs rise more rapidly than general inflation.”
Senior advocacy organizations have long stressed the inadequacy of the annual COLA in offsetting senior healthcare expenses, particularly with the escalating Medicare premiums and deductibles. The Senior Citizens League (TSCL) is one such group advocating for a reevaluation of the COLA determination method. Presently, it’s calculated based on third-quarter inflation data derived from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
TSCL proposes a shift to the Consumer Price Index for the Elderly (CPI-E), emphasizing more on healthcare and other expenses affecting seniors. Mary Johnson, a policy expert with TSCL, noted in a recent release, “Were this method in effect now, the 2024 COLA would stand at a near 4%, compared to the officially announced 3.2%.”