Tag Archives for cost-of-living adjustment

A call to Congress to strengthen, expand Social Security & Medicare 

Published in Rhode Island News Today on September 6, 2021

The 2021 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance (OASI)) and the Social Security Disability trust fund (SSDI), released last week, gives Congress this stark warning: the Social Security Trust fund is heading toward insolvency in 13 years while SSDI will see its reserve funds depleted in 2057, eight years sooner than last year’s estimate. As a whole, combined, the two Social Security trust fund reserves will be depleted in 2034, a year earlier than estimated made in last year’s Trustee report.

However, there is good news. This year’s report notes that there is more than enough time for lawmakers to make up shortfalls by immediately shoring up the ailing Social Security Old-Age and Survivors Insurance (OASI) trust fund and the Social Security Disability trust fund (SSDI) by Congress increasing revenues or cutting costs to these programs.

“The theoretical combined trust funds will exhaust their reserves by 2034, when today’s 54-year-olds reach the full retirement age and today’s youngest retirees turn 75. Upon insolvency, all beneficiaries will face a 22% across-the-board benefit cut,” says a detailed analysis released by the Washington, DC-based Committee for a Responsible Federal Budget (CRFB), a non-partisan, nonprofit organization committee that addresses federal budget and fiscal issues.

According to this year’s Medicare Trustee’s report, there was no change from last year’s projections that noted Medicare Hospital Insurance trust funds would be deleted in 2026. If this occurs, physicians, acute care facilities and nursing homes would not receive their full compensation of the program (only 91% of scheduled payments), pushing the uncompensated costs on the patients to pay.

Total Medicare expenditures are projected to increase in the future at a faster pace than both total workers’ earnings and the overall economy, says the newly released Medicare Trustee report.

In light of the projected insolvency of Social Security, this year’s Trustee’s report notes that beneficiaries may receive an estimated 3.1% cost-of-living adjustment (COLA) for benefits in 2021, the highest COLA in a decade. This large increase was triggered by higher inflation rates caused by the ongoing pandemic.

Beltway Insiders Respond

“The Trustees’ projections in this year’s report include the best estimates of the effects of the COVID-19 pandemic on the Social Security program,” said Kilolo Kijakazi, Acting Commissioner of Social Security. “The pandemic and its economic impact have had an effect on Social Security’s Trust Funds, and the future course of the pandemic is still uncertain. Yet, Social Security will continue to play a critical role in the lives of 65 million beneficiaries and 176 million workers and their families during 2021.”

“The Trustees Report confirms that Social Security’s financing is strong in the near-term yet underscores why it is so important that Congress take action now to prevent 22% in cuts across the board on all benefits in 2034,” says House Ways and Means Social Security Subcommittee Chairman John B. Larson (D-CT) in a released statement. “With the loss of traditional pensions, rising health care costs, and many people unable to save enough for retirement, there is a growing retirement crisis. 65 million Americans currently rely on Social Security benefits, yet millions are suffering and can’t make ends meet, adds Larson.

Furthermore, the Trustees Report shows that this year the cost of paying out benefits will exceed the income from the Federal Insurance Contribution Act (FICA) payments,” states Larson.

The released 2021Trustee reports on the financial solvency of Medicare and Social Security trust funds once again identify unsustainable benefit promises in Medicare and Social Security programs, stated senator Mike Crapo (R-Idaho) said in a released statement.

 “The Hospital Insurance trust fund [Medicare] is projected to be exhausted around 2026; there are $60 trillion of unfunded liabilities in Social Security programs; and unfunded liabilities increased by trillions of dollars over the last year alone,” adds Crapo.

Crapo urges Congress and the White House to “work closely together with a sense of urgency to address the challenges detailed in the Social Security and Medicare Trustees Reports. However, “most Democrats want only to expand benefit promises further without generating sustainable trust fund solvency,” he said.

Seniors Depend on Social Security on Most of Their Income

“There is no need to sound the alarm, but now is the time to address Social Security’s long-term solvency – and provide an overdue boost in benefits. Phone calls and emails to Congress are definitely warranted at this critical juncture,” says Max Richtman, President and CEO of the Washington, DC-based National Committee to Preserve Social Security and Medicare, responding to the Social Security Trustee Report released August 31.

According to Richtman, Social Security has never missed a benefit payment in its 86-year history, but remains strong. Even if no Congressional action is taken and the Trust fund becomes deleted, Social Security could still pay 79% of the benefits with revenue coming from regular worker’s payroll contributions. “But that poses a huge financial risk for the millions of retirees who depend on Social Security for most if not all of their income.  It also raises a serious political risk for members of Congress who fail to boost the program’s finances so that the trust fund remains solvent beyond 2034,” he says. 

Living on an average monthly benefit of $1,540 is tough to do, says Richtman, as retirement savings dwindle, pensions disappear and the soaring cost of senior housing and medical care.  

Nancy Altman, President of Social Security Works (SSW) and chair of the Strengthen Social Security Coalition, agrees with Richtman’s assessment of Social Security’s fiscal solvency and impact on the retiree’s income. “Today’s report shows that Social Security remains strong and continues to work well, despite the once-in-a-century pandemic. That this year’s projections are so similar to last year’s proves once again that our Social Security system is built to withstand times of crisis, providing a source of certainty in uncertain times,” she says.

“We don’t have a Social Security crisis, but we do have a retirement income crisis — made worse by the pandemic, which, among other economic impacts, forced millions of workers to retire earlier than planned. The solution is to expand Social Security, as President Joe Biden has promised to do,” suggests Altman.

According to SSW, “about one out of two married senior beneficiaries and seven out of 10 unmarried senior beneficiaries and almost one out of tow unmarried beneficiaries rely on Social Security for virtually all their income.”

Mustering the Political Will 

Richtman calls for Congress to closely look at Congressman John Larson (D-CT) legislation to fix and expand the nation’s ailing Social Security program. “For over six years, Congressman John Larson has been driving efforts to strengthen Social Security by adjusting the payroll wage cap so that high income earners begin paying their fair share,” he notes.

Larson has also proposed an across-the-board boost for all retirees, enhanced benefits for the most vulnerable seniors, and a more accurate formula for calculating annual cost-of-living adjustments (COLAs) so that benefits truly keep pace with inflation, says Richtman, noting that the Connecticut Congressman’s  proposals also align with President Biden’s initiatives to strengthen and expand Social Security. 

“Of course, the default response from conservatives will be to suggest, indirectly or otherwise that Social Security benefits must be cut to address the program’s funding shortfall,” states Richtman said. “Some will insist that Social Security be privatized, which would gamble workers’ hard-earned retirement benefits on Wall Street. Meanwhile, conservatives likely will oppose common sense revenue-side measures that would actually boost benefits, including Rep. Larson’s proposed adjustment of the payroll wage cap.”  For Congress to act to advance legislation to strengthen and expand Social Security, voters must put political pressure on their elected officials “to muster the political will to get it done,” says Richtman.

A Final Note…

It’s better to make changes to ensure Social Security’s solvency now, rather than waiting, suggests CRFB, a delay only adds more costs to fixing trust fund shortfalls in a timely fashion.“ Acting now allows more policy options, lets policymakers phase in changes more gradually, and provides more time for workers to adjust their work and savings, if necessary,” the fiscal advocacy group says.

The clock is ticking. There are almost 4,500 days until the project insolvency of the Social Security trust fund. It is now time for Congress to find viable, bipartisan solutions to fixing Social Security and Medicare, once and for all. 

The 276-page 2021 Social Security Trust Fund report is available by going to https://www.ssa.gov/oact/TR/2021/tr2021.pdf.

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Cicilline Hopes Dems Take Senate

Published in Pawtucket Times on November 9, 2020

On Saturday, November 7, at 11:45 a.m. (eastern Standard Time), as the Trump campaign called for legal challenges looming over ballot counting, CNBC projected Joe Biden to win the U.S. Election, making him president-elect.  As the dust settles over this very divisive election, Pennsylvania’s 20 electoral votes propelled Biden over the 273 electoral votes needed to win.

With the Democrats now taking control of the White House and maintaining control of the House, even with a loss of seats, the battle for control of the Senate now turns to Georgia with one regular and one special election scheduled to fill a vacancy take place on January 5.  

With garnering less than 50 percent of the vote, in accordance with Georgia law, GOP Sen. David Perdue and Democratic challenger Jon Ossoff meet again at a January 5 runoff election.  Rev. Raphael Warnock, the democratic challenger, and governor-appointed Republican Sen. Kelly Loeffler, who replaced Sen. Johnny Isakson when he retired last year, battle in the Peach State for a Senate seat in special-election runoff.

Democrats now have a long-shot of taking control of the Senate with Kamala Harris being elected vice president and if they win the two Senate races in Georgia’s upcoming election. By winning the Senate, both parties will each have 50 seats, Harris tipping the balance of power to the Democrats. 

McConnell, Oversees “Least Productive” Congress in its History

Rep. David Cicilline (D-RI) says that the Democratic-controlled House has had one of the most productive Congresses in the institution’s history. “We’ve passed more than 600 bills in the House, but there are more than 375 of them stuck on Mitch McConnell’s desk, many of them bipartisan,” notes Cicilline, who serves as Co-Chair of the House Democratic Policy and Communications Committee.

“Obviously, both Georgia senate races are hanging in balance and it’s important we win them.  A Democratic majority in the Senate will allow for the passage of the “For the People” agenda which creates jobs, raises wages, lowers health care costs and increases access to affordable prescription drugs.  These bills are good for Rhode Islanders and all Americans,” states Cicilline.

“I look foward to working with the Biden Administration to put together a robust agenda for the first 100 days and get to work passing bills that will help Rhode Island’s economy, workers and seniors,” adds Cicilline.

With the release of its 2020 Democracy Scorecard in September, Aaron Sherb, director of legislative affairs for the Washington, DC based Common Cause, documents how a Republican-controlled Senate has resulted in legislative gridlock.  “What the 2020 Democracy Scorecard makes plain is the blatant disregard for democracy reforms in the Senate. “The House of Representatives passed nearly 10 democracy reform bills, often with bipartisan support, this session, but Majority Leader Mitch McConnell (R-KY) blocked debate and mark-ups on all of these bills and refused to allow a vote,” he said.

In fact, the Senate’s inaction has the 116th Congress on tract to be the least productive in history, with just one percent of the bills becoming law,” charges Sherb. author of the 2020 Democracy Scorecard,

The National Committee to Preserve Social Security and Medicare (NCPSSM) strongly agrees with Sherb’s assessment of McConnell’s successful efforts to block Democratic and bipartisan-sponsored common-sense legislation critical to protecting the health and well-being of Americans.  Seniors will not be better off with a GOP-controlled Senate, warns NCPSSM, calling for the Democrats to win the Georgia Senate special elections to take over the control of the Senate.

According to NCPSSM, a Washington, DC-based advocacy group with a mission to protect Social Security and Medicare, “Since 2019, the Democratic-controlled House has served as a firewall against Trump’s efforts to defund, cut and privatize Security and Medicare.  But as long as Republicans control the Senate, legislation to protect and expand seniors’ earned benefits will remain in limbo. Under a Democratic majority, though, seniors would likely see real progress where their financial and health security are concerned.”

NCPSSM charges Senate majority leader McConnell, who gave himself the nickname, the “Grim Reaper,” has buried hundreds of House-passed bills during the 116th Congress that would have benefitted America’s seniors.  He even refused to take up last May’s House-passed COVID-passed relief bill, and the lower chambers recently passed COVID-19 legislation, as the nation’s public health officials battled the spread and spiking of the deadly virus. 

McConnell also blocked consideration of H.R. 3, the Lower Drug Costs Now Act, which the House passed almost a year ago, says NCPSSM. 

H.R. 3 would allow Medicare to negotiate prescription prices with Big Pharma, which would save the government and seniors nearly $350 billion in drug costs. The bill would also expand traditional Medicare by adding dental, vision, and hearing benefits.

NCPSSM says that the GOP Senate Leader will not even allow a bipartisan crafted bill, the S 2543, the “Prescription Drug Pricing Reduction Act, introduced by Senators Chuck Grassley (R-Iowa), and Ron Wyden (D-OR), to be considered on the Senate floor.  According to the Congressional Budget Office, this legislation would save taxpayers $95 billion, reduce out-of-pocket spending by $72 billion and finally reduce premiums by $1 billion.

The eyes are now on the Supreme Court, where three Trump-appointed Justices will rule on legal issues coming before the nation’s highest court. “If the Supreme Court strikes down the Affordable Care Act, which strengthens Medicare’s finances and included enhanced benefits for seniors (not to mention protecting older patients with pre-existing conditions), a Democratic House and Senate could replace or revise it,” notes NCPSSM. 

House Democrats are considering HR 860, The Social Security 2100 Act, to strengthen and expand Social Security.  The landmark legislation, introduced by Rep. John Larson (D-CT), referred to the Subcommittee on Social Security would keep the program financially healthy through the end of the century, while boosting benefits for all retirees. NCPSSM notes that president-elect Joe Biden has incorporated many of the proposals in this bill into his own plan. 

NCPSSM adds that a Democratic-controlled House and Senate could reduce the financial impact on COVID-19 on current and future retirees’ Social Security benefits.  Under Democratic Senate leadership, notes the Washington, DC-based advocacy group, the upper chamber could work with the House to increase the tiny 1.3 percent cost-of-living adjustment (COLA) to 3 percent for 2021.  which would be welcome news for older Americans who were laid off during the COVID-19 pandemic that sweep the nation, forcing many into early retirement

Finally, NCPSSM says that a Democratic-controlled House and Senate could prevent aging Baby Boomers born in 1960 (and possibly 1961, as well) from suffering a lifetime reduction in their future benefits caused by a COVID-related drop in average wages.

A Final Note:  Let’s Bring Back House Aging Committee

During the last two Congresses, Cicilline introduced a resolution three times to re-establish a House Permanent Select Committee on Aging. Two of the times a GOP-controlled Congress blocked consideration.  Democrat House efforts to impeach President Donald Trump and a continual battle over policy issues with the Trump Administration and the Republican-controlled Senate put Cicilline’s resolution on hold the third time.  

The previous House Aging Committee was active from 1974 to 1993 (until it was disbanded because of budgetary issues) put the spot light on an array of senior issues including elder abuse, helped increase home care benefits for older adults and helped establish research and care centers for Alzheimer’s disease.  

After introducing his resolution this Congress, Cicilline says that a reestablished House Aging Committee could initiate comprehensive studies on aging policy issues, funding priorities, and trends.  Like its predecessor, its efforts would not be limited by narrow jurisdictional boundaries of the standing committee but broadly at targeted aging policy issues, he notes.

According to Cicilline, the House can easily create an ad hoc (temporary) select committee by approving a simple resolution that contains language establishing the committee—giving a purpose, defining membership, and detailing other aspects.  Funding would be up to the Appropriations Committee. Salaries and expenses of standing committees, special and select, are authorized through the Legislative Branch Appropriations bill.

During the 117th Congress, as the House begins its debates on Social Security, Medicare and Medicaid, the Older Americans Act, and other issues of importance to older adults, it will be important to have a House Aging Committee that once again puts the spotlight and attention on America’s aging issues. 

Social Security ’21 Cola Increase Anemic

Published in RINewsToday.com on on October 19, 2020

With the Social Security Administration’s (SSA) announcement of next year’s Social Security and Supplemental Security Income’s (SSI) meager cost-of-living adjustment (COLA), over 70 million beneficiaries will only see an increase of 1.3 percent in their monthly checks in 2021.  Last year’s COLA increase was 2.8 percent, the largest in seven years.

According to SSA, the 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. Increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries start on December 31, 2020. 

SSA ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics. 

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $142,800 from $137,700, says SSA.

The earnings limit for workers who are younger than “full” retirement age will increase to $18,960. (SSA deducts $1 from benefits for each $2 earned over $18,960.)

The earnings limit for people reaching their “full” retirement age in 2021 will increase to $50,520. (SSA deducts $1 from benefits for each $3 earned over $50,520 until the month the worker turns “full” retirement age.)

There is no limit on earnings for workers who are “full” retirement age or older for the entire year. 

Next Year’s COLA Increase Not Enough 

Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM) calls the increase as inadequate especially for COVID-Ravaged Seniors and noted that it’s the lowest since 2017.  

“The timing could not be worse. The COVID pandemic has devastated many older Americans both physically and financially.  Seniors living on fixed incomes need a lifeboat; this COLA increase is more like an underinflated inner tube,” says Richtman.

The average Social Security beneficiary will see a paltry $20 month more in benefits in 2021, calculates Richtman. “This COLA is barely enough for one prescription co-pay or half a bag of groceries. Worse yet, seniors could lose almost half of their COLA increase to a rise in the Medicare Part B premium for 2021, the exact amount of which has not yet been announced,” he warns.  

“The current COLA formula – the CPI-W – is woefully inadequate for calculating the true impact of inflation on seniors’ pocketbooks. It especially under-represents the rising costs that retirees pay for expenses like health care, prescription drugs, food, and housing. We support the adoption of the CPI-E (Consumer Price Index for the Elderly), which properly weights the goods and services that seniors spend their money on,” says Richtman. 

Examining the Growth of SSA COLAs 

Social Security checks in 2020 are almost 20 percent lower than they otherwise would be, due to the long-term impact of extremely low annual inflation adjustments, according to a newly released analysis by The Senior Citizens League (TSCL).  The analysis comes as SSA announced that the 2021 COLA will be just 1.3 percent, making it one of the lowest ever paid. 

“People who have been receiving benefits for 12 years or longer have experienced an unprecedented series of extremely low cost-of-living adjustments (COLAs),” says TSCL’s Mary Johnson, a Social Security policy analyst for the Alexandria, Virginia nonpartisan senior advocacy group. “What’s more those inflation adjustments do not account for rapidly rising Medicare Part B premiums that are increasing several times faster than the COLA,” she says, noting that this causing those with the lower Social Security benefits to see little growth in their net Social Security income after deduction of the Part B premium.  

Johnson’s COLA analysis, released on Oct. 13, compared the growth of retiree benefits from 2009-through 2020 to determine how much more income retirees would receive if COLAs had grown by a more typical rate of 3 percent. TSCL’s analysis found that an “average” retiree benefit of $1,075 per month in 2009 has grown to $1,249 in 2020, but, if COLAs had just averaged 3 percent, that benefit would be $247 per month higher today (19.8 percent higher), and those individuals would have received $18,227.40 more in Social Security income over the 2 010 to 2020 period. 

During that period COLAs have averaged just 1.4 percent. In 2010, 2011, and 2016 there was no COLA payable at all and, in 2017, the COLA was 0.03 percent. “But COLAs have never remained so low, for such an extended period of time, in history of Social Security,” says Johnson, who has studied COLAs for more than 25 years.  Over the 20-year period covering 1990 to 2009, COLAs routinely averaged 3 percent annually, and were even higher before that period. 

According to Johnson, the suppressed growth in Social Security benefits not only creates ongoing benefit adequacy issues, but also Medicare budgetary programs when the COLA is not sufficient to cover rising Part B premiums for large number of beneficiaries. When the dollar amount of the annual Medicare Part B premium increase is greater than the dollar amount of an individual’s annual COLA, the Social Security benefits of about 70 percent of Medicare beneficiaries are protected by the hold-harmless provision in the Social Security Act.  The Medicare Part B premium of those individuals is reduced to prevent their net Social Security benefits from being lower than the year before, she says. 

However, Johnson notes that the people who are not covered by hold harmless include higher income beneficiaries, beneficiaries who have not started Social Security yet and who pay for Medicare by check and about 19 percent of beneficiaries whose incomes are so low that their state Medicaid programs pay their Medicare Part B premiums on their behalf. 

Johnson says, “that a provision of a recently enacted government spending bill restricts Part B premium increases in 2021. The bill caps the Part B premium increase for next year at the 2020 amount plus 25 percent of the differences between the 2020 amount and a preliminary amount for 2021.”

Don’t look for the “potential Part B spike” to go away, warns Johnson. “Unless Congress acts to boost Social Security benefits and finds a better way to adjust benefits for growing Medicare costs, this problem will continue occur with greater frequency in the future,” she says.

Fixing SSA’s COLA Problem Once and For All

During the COVID-19 pandemic seniors are relying more on their Social Security check but continue to face cost increases each year beyond the extra income provided by the COLA, says Social Security Subcommittee Chairman John B. Larson (D-Connecticut) in a statement following SSA’s announcement of its tiny 2021 COLA increase. “It’s time to fix that by enacting the Social Security 2100 Act.,” says the Connecticut Congressman calling for passage of his legislative proposal that would strengthen SSA benefits by basing the COLA on what seniors actually spend on items such as medical expenses, food, and housing. Under this new CPI-E index, a beneficiary would experience benefits that are 6 percent higher by the time they reach age 90. 

Meanwhile, Congressman Peter DeFazio (D-Oregon) sponsored and Larson, a co-sponsor, have proposed emergency legislation to increase next year’s COLA up to 3 percent. “Due to the COVID-19 pandemic, seniors are facing additional financial burdens in order to stay safe,” said DeFazio.  “This absolutely anemic COLA won’t even come close to helping them afford even their everyday expenses, let alone those exacerbated by COVID-19. Raising the COLA to 3 percent 2021 will provide seniors with an immediate, crucial lifeline during the ongoing coronavirus crisis,” says the Oregon Congressman. DeFazio’s legislative proposal, the Social Security Expansion Act, would also provide a permanent fix to the COLA formula, like Larson using a CPI-E index to factor in seniors’ actual, everyday expenses.