American Federation of Government Employees National President J. David Cox Sr. is calling on Congress to pass emergency legislation to prevent massive increases in Medicare Part B premiums for millions of retirees next year.
The government today announced a 0.3 percent cost-of-living adjustment for federal retirees and Social Security recipients. The COLA is based on the year-over-year change in the prices for goods and services purchased by hourly and clerical workers.
This small COLA has inadvertently triggered a massive increase in Medicare Part B premiums for the 30 percent of beneficiaries who do not currently receive Social Security benefits.
Premiums for Medicare Part B are expected to increase 23 percent next year, from $121 a month to $149 a month. A so-called “hold harmless” provision prevents Medicare Part B premiums from increasing by more than the dollar increase in an individual’s Social Security payment. But for the 16 million retirees who don’t receive Social Security, including 1.6 million federal retirees under the Civil Service Retirement System, the full increase must be paid unless Congress acts.
“Congress must act now to prevent a massive increase in Medicare Part B premiums for this group of retirees,” Cox said. “Although most seniors would be protected, this group will have to pay more solely because of the uniqueness of their pension system.”
Congress last year extended the hold harmless provision to cover all Medicare Part B beneficiaries when there is no cost-of-living adjustment. However, this provision does not apply when there is a small COLA, as there will be in 2017.
Even without the increase in Medicare Part B premiums, retirees will have to tighten their belts to account for next year’s miniscule cost-of-living adjustment. Retirees already are facing a 6.2% increase in their health insurance premiums next year.
“Prices for many items that seniors must purchase are rising faster than the overall inflation rate,” Cox said. “Forcing this group of retirees to shoulder such a huge cost burden will have a devastating impact on their already modest living standards.”
The Alliance for Retired Americans have been pushing to increase Social Security benefits and change the way cost of living is calculated.
“The Alliance for Retired Americans is deeply disappointed by the announcement today that there will be a miniscule 0.3% benefit increase for millions of Social Security beneficiaries in 2017,” said Richard Fiesta, Executive Director of the Alliance for Retired Americans. “For the average retiree, that means just a $5.00 per month increase, not enough to keep up with the cost of their prescription medications. This follows a 0% COLA in 2016. Most retirees are going to continue to have a hard time paying for basic necessities.”
“That’s why Congress must expand earned Social Security benefits and change the formula used to calculate future COLAs to the Consumer Price Index for the Elderly (CPI-E). The CPI-E would base the calculation on what seniors actually spend their money on. That list includes items such as health care and housing, which account for most retirees’ spending,” Fiesta added.
The AFL-CIO was “disappointed” with this COLA announcement.
“A weak increase that amounts to a mere $5.00 more a month for the average retired worker is a disappointment for the millions who rely on Social Security to stay afloat during retirement,” said Richard Trumka, President of the AFL-CIO. “Protecting our seniors against inflation is one of the many obligations we have to retired Americans. The 2017 adjustment falls short of that goal because it fails to reflect seniors’ extraordinary expenses.”
“The 2017 COLA not only fails to keep pace with seniors’ high health care and prescription drug costs, it also means millions of retirees, including many retired public employees, will be hit hard because the law fails to protect them against large Medicare Part B premium increases when inflation is low. State Medicaid budgets that cover Medicare premiums for low-income seniors similarly will be affected. We urge Congress to step in and limit the coming financial blow to thousands of vulnerable retirees and state budgets,” Trumka added.