The Social Security administration announced a 2% increase in benefits in 2018. The increase is estimated to affect 70 million Americans. The increase in the Consumer Price Index (CPI-W) is used to determine the cost-of-living adjustment (COLA) in order to keep Social Security benefits in line with changes in consumer prices. Since the great recession in 2009, recipients have seen relatively modest COLAs, including three years with no increases at all. The 2018 increase is the largest COLA since 2012, which saw a 3.6% increase in benefits.
This adjustment may be partially or completely offset by increased Medicare Part B premiums for many recipients. The government has not announced the final figures for next year’s Medicare Part B premiums, which cover doctor visits, as well as outpatient care. Additionally, a rule known as the “hold harmless provision” recently has shielded many retirees from increased Medicare Part B premiums in the event that it would reduce their Social Security benefits. This provision affects recipients whose premiums are deducted from their monthly Social Security check. Although the hold harmless provision protects some retirees from having their Social Security reduced, a COLA would not fall under this exemption. As a result, recipients may see some, or all, of their 2018 COLA go towards paying their Medicare Part B premiums.
