Social Security Benefits Likely Will Not Increase in 2010, Would Have ‘Major Implications’ on Medicare Parts B, D

The Obama administration and the Congressional Budget Office have indicated that Social Security beneficiaries will not receive a cost-of-living increase in 2010 or 2011, which would have "major implications for Medicare," the New York Times reports.

Social Security typically increases benefits annually to keep up with rising prices of consumer goods; however, the current economic recession, coupled with other factors, has resulted in low inflation, which likely will result in the lack of a cost-of-living increase. Federal law stipulates that most Social Security beneficiaries cannot have their Medicare Part B premiums increase by more than the dollar amount of the cost-of-living increase in their Social Security checks.

As a result, about 75% of beneficiaries' Medicare Part B premiums will remain the same. However, about 25% of Medicare beneficiaries are not protected by this law and could see their premiums increase. According to the Times, most Medicare beneficiaries pay a monthly Part B premium of $96.40. CBO estimates the basic premium will rise to $119 next year and to $123 in 2011 for those not protected by the law. In addition, the Times reports that millions of beneficiaries also could experience higher premiums for drug coverage under Medicare Part D because there are no laws that prevent such an increase.

David Certner, legislative counsel at AARP, said, "If, as expected, there is no COLA in Social Security next year but premiums for drug coverage increase, as expected, millions of beneficiaries will see their Social Security checks reduced for the first time" (Pear, New York Times, 5/3).