The Social Security Administration will provide no cost of living adjustment (COLA) for 2016

By Mike Sosna
Published on October 15, 2015

Today, it was officially announced by the administration that the Social Security Administration will provide no cost of living adjustment (COLA) for 2016.

At the same time, the Medicare Part B premium and deductible are expected to increase significantly for some people next year. There might be a fix for Medicare Part B and deductible but as far as the cost of living increase, it’s all set in stone as per the Social Security Administration.

The amount of money that is paid out by Social Security is adjusted each year to take into account the rate of inflation. There have only been three different years where there was no cost of living increase. This happened five years ago and it’s happening again going forward in 2016.

Today’s announcement of no cost of living adjustment, or COLA will affect 65 million people inclusive of senior citizens and those are are disabled. What is significant is that one failure to provide a cost of living increase affects each person for the rest of their lives because even when there is a cost of living increase in the future, that COLA will be on top of an amount that failed to increase in a year or multiple years (three times in the past 5 years) so each Social Security benefit amount will be forever lower than it would be if there was cost of living increase each year like there was for the past 40 years since the system of automatic adjustments for inflation was created in 1975.

It was found that no cost of living increase was necessary only in 2010, 2011 and now going forward in 2016. This year it was determined that gas prices were lower so seniors and those with disability are not affected by inflation in general and are not being being affected by higher prices for necessities in particular.
It has been determined that people are somehow not paying more for food, utilities, maintenance or rent and other necessities at this time so there will be no cost of living adjustment whatsoever in 2016.

COLA is determined each September once the inflation report is issues. The COLA in 2015 was only determined to be 1.7% and cost of living increases climbed by less than 2% for the past three years. Last month it was found that gas prices decreased almost 30%. The way the Social Security Administration measures inflation found a .6% decrease through September 2015.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)

Many of you have discussed the issue. The government’s measurement of inflation is one way of measuring inflation but it doesn’t represent or reflect how people on Social Security have to spend their money. Statistically, seniors and those with disabilities are not benefiting as much by lower gas prices because a majority are not driving as much as other Americans and many do not drive or are no longer driving to work each day. Seniors and those with disabilities are disproportionately affected by higher medical expenses which have increased at a higher rate than overall inflation no matter how inflation is calculated.

Medicare fix?

As discussed on this website, 30 percent of Medicare beneficiaries might find a surprise in 2016 where their Medicare Part B premium will increase approximately six times more than healthcare inflation was found to increase for everyone else utilizing healthcare in the United States. The fix would have to be worked out by either Congress changing a law or the Centers for Medicare and Medicaid Services CMS deciding not to go forward with their plans for increasing Medicare Part B premiums and deductible.

Reminder: Medicare open enrollment begins today,Thursday 15 October.