New cost-of-living adjustment largest since 2012
Social Security benefits will increase 2.8 percent in 2019, the largest cost-of-living adjustment (COLA) in seven years.
The COLA, announced Thursday, Oct. 11, will increase the average Social Security retirement benefit by $39 a month (roughly $468 a year). The average single retired Social Security recipient is expected to receive $1,422 in December 2018 before increasing to $1,461 a month later. The COLA affects household budgets for about 1 in 5 Americans, including Social Security beneficiaries, disabled veterans and federal retirees.
AARP Chief Executive Officer Jo Ann Jenkins said, “The 2.8 percent COLA announced today brings needed income security to those Social Security beneficiaries and their families who depend on their earned, modest benefits. The COLA is particularly important for the tens of millions of families who depend on Social Security for all or most of their income, many of whom may have lost ground during the Great Recession. Unfortunately, the cost of living increase may not adequately cover their expenses that rise faster than inflation including health, prescription drug, utility and housing costs.”
The government has not yet announced whether monthly premium costs for Medicare Part B will go up in 2019. If the Part B premium does increase, it could affect actual individual benefits because the premium is deducted from Social Security payments. Part B Medicare covers physician and diagnostic services, outpatient hospital services, certain home health services and durable medical equipment.
According to Nancy Altman, president of Social Security Works, a nonprofit advocacy group, those 65 and older could see their Social Security COLA swallowed up by health care costs, including the Medicare monthly premium increase.
The Medicare monthly premium could be announced as early as next week. Medicare open enrollment begins Monday (Oct. 15) and ends Dec. 7.
Social Security is financed by a tax on workers’ wages. Next year, the maximum amount of earnings subject to the Social Security tax will increase from $128,400 to $132,900.
The standard Medicare Part B monthly premium for 2019 will be $135.50, a modest increase of just $1.50 per month over 2018’s standard premium.
In addition, the annual Medicare Part B deductible will increase, but by just $2, to $185. After meeting this deductible, beneficiaries typically pay 20% of the Medicare-approved amount for covered services.
Medicare Part B is the medical insurance component of the Medicare program. It pays for costs like doctor’s office visits, medical equipment, and outpatient procedures. Meanwhile, Medicare Part A, which mainly covers hospital stays, remains premium-free for most American seniors, although the Part A deductible is rising from $1,340 in 2018 to $1,364 in 2019