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Your Social Security

By Christina Vital
Manager
Rock Island Social Security office

UNDER THE LAW NO SOCIAL SECURITY COLA FOR 2011

Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 58 million Americans will not automatically increase in 2011, the Social Security Administration has announced.

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. As determined by the Bureau of Labor Statistics, there is 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.

Other changes that would normally take effect based on changes in the national average wage index also will not take effect in January 2011. 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. These amounts will remain unchanged in 2011. The attached fact sheet provides more information on 2011 Social Security and SSI changes.

Information about Medicare changes for 2011, when available, will be found at www.Medicare.gov. 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 the 2011 COLA, go to www.socialsecurity.gov/cola. For additional information about changes in the national average wage index, go to www.socialsecurity.gov/OACT/COLA/AWI.html.

History of Automatic Cost-Of-Living Adjustments

Automatic benefit increases, also known as cost-of-living adjustments or COLAs, have been in effect since 1975. The 1975-82 COLAs were effective with Social Security benefits payable for June (received by beneficiaries in July) in each of those years; thereafter COLAs have been effective with benefits payable for December (received by beneficiaries in January). COLAs for 1975-2011 are shown below.

Automatic Cost-Of-Living Adjustments
July 1975 8.0% January 1988 4.2% January 2000 2.5%
July 1976 6.4% January 1989 4.0% January 2001 3.5%
July 1977 5.9% January 1990 4.7% January 2002 2.6%
July 1978 6.5% January 1991 5.4% January 2003 1.4%
July 1979 9.9% January 1992 3.7% January 2004 2.1%
July 1980 14.3% January 1993 3.0% January 2005 2.7%
July 1981 11.2% January 1994 2.6% January 2006 4.1%
July 1982 7.4% January 1995 2.8% January 2007 3.3%
January 1984 3.5% January 1996 2.6% January 2008 2.3%
January 1985 3.5% January 1997 2.9% January 2009 5.8%
January 1986 3.1% January 1998 2.1% January 2010 0.0%
January 1987 1.3% January 1999 1.3% January 2011 0.0%

The COLA for December 1999 was originally determined as 2.4 percent based on CPIs published by the Bureau of Labor Statistics. Pursuant to Public Law 106-554, however, this COLA is effectively now 2.5 percent.

The first automatic COLA, for June 1975, was based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the second quarter of 1974 to the first quarter of 1975. The 1976-82 COLAs were based on increases in the CPI-W from the first quarter of the prior year to the corresponding quarter of the current year in which the COLA became effective. After 1982, COLAs have been based on increases in the CPI-W from the third quarter of the prior year (or the last year a COLA was determined if there was no COLA the prior year) to the corresponding quarter of the current year.