Medicare Premiums Absorbing Social Security COLA Increase

Oct 20, 2011, 11:00 by R.E. Christian

Many seniors welcomed the announcement of the first U.S. Social Security cost of living increase since 2009 but AARP says part the increase will go to Medicare.

Premiums for Part B, which cover doctor visits and out-patient services, are often deducted directly from a retiree's Social Security payment, but seniors will not know the exact amount until the Medicare Part B premiums for next year are announced. The announcement is expected by the end of October, AARP says.

Nancy LeaMond, executive vice president of the AARP, said the first increase in three years -- 3.6 percent, or about $39 a month per average recipient -- will provide much-needed relief to millions.

"Ironically, some in Washington are calling for permanently reducing Social Security checks for today's seniors and future retirees. As part of a deficit reduction deal, many are calling on the 'super committee' to consider a new way to calculate the COLA, which would cut Social Security benefits by $112 billion over 10 years," LeaMond said in a statement. "This so-called 'chained CPI,' through compounding, would cut seniors' benefits by thousands of dollars over their lifetimes -- and the older one gets, the larger the cut."

Social Security is the principal source of family income for nearly half of 55 million older Americans, who have incomes of roughly $20,000, and keeps nearly one-third of them out of poverty, LeaMond said.

"Medicare premiums are also expected to rise for many," LeaMond said.

Source: UPI