Although inflation in the United States continued to decline in June – hitting its lowest level in more than two years – the latest Social Security cost-of-living adjustment (COLA) estimate for 2024 in fact ticked higher.
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Overall inflation in June 2023 increased by 3% from the previous year, according to the The US Bureau of Labor Statistics data was released on Wednesday. This was the smallest 12-month increase since the period ended in March 2021. The shelter index was among the largest contributors to the gain, reflecting higher housing and rent costs — something that has a particular impact on seniors on fixed incomes.
Based on BLS data for June, the Social Security COLA for 2024 will be 3%, estimates the Senior Citizens Association, a nonpartisan seniors advocacy group. This estimate is higher than COLA’s estimate for the previous month of 2.7%.
As the Senior Citizens Association noted, the Consumer Price Index for urban wage earners and clerical workers (CPI-W) — the indicator used to determine annual COLA — rose just 2.3% year-over-year in June. However, the average inflation rate over the past 12 months has increased slightly and thus affected the COLA estimate.
The COLA estimate may change again because there are still three more months of inflation data before the final 2024 COLA is announced in October. The COLA is based on inflation in the third quarter (July, August, and September) as measured by the Consumer Price Index for urban wage earners and clerical workers (CPI-W).
As previously reported by GOBankingRates, 3.0% COLA will do Representing a significant decrease from this year’s COLA of 8.7% — the highest since the early 1980s. Social Security beneficiaries can thank the higher inflation rate of 2022 for their biggest payments this year.
A 3.0% COLA would raise the current average monthly benefit of $1,787.00 by about $53.60, according to the Senior Citizens Association. However, Social Security recipients “won’t learn the bottom line” until Medicare Part B premiums are announced. Part B premiums are automatically deducted from most recipients’ Social Security checks and these deductions can have a significant impact.
“In many years, a Part B premium increase could take away most, or even all, of the COLA, leaving little to cover other rate hikes,” Mary Johnson, an analyst for Social Security and Medicare policies at the Senior Citizens Association, said in a paper. launch.
In its March annual report, the Medicare Trustees projected monthly Part B premiums to increase from $164.90 in 2023 to $174.80 in 2024. But as Johnson pointed out, this is just an estimate and “doesn’t include any significant new costs coming in until after Issuance of appreciation.
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Medicare coverage for another new Alzheimer’s drug, Lecanemab, known by the brand name Leqembi, may be one of the most important “significant” new costs. It is expected to cost $26,000 per year without insurance.
“Based on spending estimates, we expect that the drug and related Part B services required to manage and monitor a patient for serious side effects will add about $5 per month to everyone’s Part B premium, which could bring the 2024 premium to about $179.80 per person,” Johnson said. Most recipients in total could see their Part B premiums increase by about $15 per month from 2023. Other costs could push their Part B premiums higher.”
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This article originally appeared GOBankingRates.com: Social Security: Latest estimate 2024 COLA inches higher
