It’s Official: No 2011 COLA Increase for Social Security

In announcing the news, the agency noted that the Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a cost-of-living adjustment (COLA) was determined to the third quarter of the current year.  However, as determined by the Bureau of Labor Statistics, there was no increase in the CPI-W from the third quarter of 2008 – the last year a COLA was determined – to the third quarter of 2010.  “Therefore, under existing law, there can be no COLA in 2011,” according to the announcement.

It was also noted that other changes that would normally take effect based on changes in the national average wage index also will not take effect in January 2011 – including an increase in the amount of wages subject to Social Security withholding.  “Since there is no COLA, the statute also prohibits a change in the maximum amount of earnings subject to the Social Security tax as well as the retirement earnings test exempt amounts,” according to the Social Security Administration, which noted that these amounts will remain unchanged in 2011.  That means that the maximum taxable earnings for 2011 will remain $106,800.

Other changes are detailed at http://www.socialsecurity.gov/pressoffice/factsheets/colafacts2011.htm

Separately, House Speaker Nancy Pelosi has said the chamber will vote next month on legislation providing one-time $250 payments to Social Security recipients, a proposal that surfaced last year when, for the first time since 1975, there also was no COLA adjustment to Social Security.

Information about Medicare changes for 2011, when available, will be found at www.Medicare.gov.  According to the announcement, the Department of Health and Human Services has not yet announced if there will be any Medicare premium changes for 2011.  “Should there be an increase in the Medicare Part B premium, the law contains a “hold harmless” provision that protects more than 70 percent of Social Security beneficiaries from paying a higher Part B premium, in order to avoid reducing their net Social Security benefit.  Those not protected include higher income beneficiaries subject to an income-adjusted Part B premium and beneficiaries newly entitled to Part B in 2011.  In addition, almost 20 percent of beneficiaries have their Medicare Part B premiums paid by state medical assistance programs and thus will see no change in their Social Security benefit.  The state will be required to pay any Medicare Part B premium increase.”

For additional information about changes in the national average wage index, go to www.socialsecurity.gov/OACT/COLA/AWI.html.