The Social Security Administration has announced an 1.6 percent increase in benefits for 2020, which is less than the increase that Social Security beneficiaries received in 2019 by almost one-half. (https://www.elderlawanswers.com/the-2020-social-security-increase-will-be-smaller-than-2019s-17403). Increases are tied to the consumer price index; the modest uptick in inflation and gas prices means a smaller increase in Social Security benefits. In 2019, the increase in benefits was 2.8 percent; in 2018, the increase was 2 percent. The average monthly benefit for an individual will go up to $1,503 per month, which is an average of $24 per month or $288 per year. The cost-of-living change also will affect the maximum amount of earnings subject to Social Security tax, from the current $132,700 up to $137,700.
The monthly federal Supplemental Security Income (SSI) payment standard also changes in 2020. This becomes $783 for an individual and $1,175 for a couple. SSI is the benefit that disabled persons may qualify for if they did not work sufficient quarters to be eligible for SSDI. The insurance associated with SSI is Medical Assistance.
Medicare also adjusts premiums each year. The Medicare Part B (outpatient services) premium will increase for many beneficiaries to $144.60 (an increase of $9.10 from 2019). The Centers for Medicare and Medicaid Services (CMS) blames the cost of medications administered in physician offices and other outpatient settings for the steep increase. This further reduces the “raise” received in Social Security benefits since most beneficiaries have the Part B premium deducted directly from their Social Security benefit. The annual Part B deductible will increase by $13 to $198 in 2020. Higher income beneficiaries will see corresponding increases in their monthly bills for Part B coverage also.
CMS also announced an increase in the Medicare Part A inpatient hospital deductible upon admission. This amount increases $44 to $1,408 in 2020. For beneficiaries admitted to a skilled nursing facility, the daily coinsurance for days 21 through 100 will be $176.00. More facts can be found on www.medicare.gov.
The Bureau of Labor Statistics uses the Consumer Price Index for Urban Wage Earners and Clerical Workers to set the inflation rate. This form of the Consumer Price Index utilizes prices for gasoline, electronics, and other such items. Many advocates are suggesting that a different index, for example, the Consumer Price Index for the Elderly which puts more emphasis on medical and housing expenses, would be a more appropriate index to use to determine the cost-of-living for those on Social Security. It is unclear if Medicare premiums and deductibles would be affected by utilizing a different index. However, having a bigger “raise” in Social Security benefits would assist in being able to pay premiums and deductibles for Medicare.
The legal advice in this column is general in nature, Consult your attorney for advice to fit your particular situation.