Tag Archives: Social Security cost of living increase

Ida May Fuller and Social Security

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Today is the anniversary of a major event in Social Security history. 

On January 31, 1940, the first monthly Social Security retirement check was issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54. She was the first beneficiary of recurring monthly Social Security payments. Here is a 1950 photo of her.

Born in 1874, Ida May Fuller worked as a school teacher before becoming a legal secretary in 1905. Never married, she worked for about three years under the Social Security program before retiring in 1939. The accumulated Social Security taxes on her salary during those three years was a total of $24.75.

She started collecting benefits in January 1940 at age 65 and lived to be 100 years old, dying in 1975 with a secure place in Social Security history. During her lifetime she collected a total of $22,888.92 in Social Security benefits.

When Ida May Fuller received her first $22.54 benefit payment it would be the same monthly amount received for the next 10 years. For her, and the millions of other Social Security beneficiaries like her, the amount of that first benefit check was the amount they could expect to receive for life. It was not until the 1950 Amendments that Congress first legislated an increase in benefits. Automatic cost-of-living adjustments (COLAs) did not begin until 1975.

Final decisions on early applications for Social Security benefits were completed in Washington D.C. with benefit amounts then certified for payment by the Treasury Department. Claims were grouped in batches of 1,000 and a Certification List for each batch was sent to Treasury.

Miss Fuller’s claim was the first one on the first Certification List. As a result, the first Social Security monthly benefit, check number 00-000-001 dated January 31, 1940 was issued to Ida May Fuller, establishing her place in Social Security history.

More about the history of Social Security is at http://www.socialsecurity.gov/history/.  

 

COLA history

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The upcoming 1.7 percent cost-of-living adjustment (COLA) begins with benefits that more than 56 million Social Security beneficiaries receive in January 2013. Increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries will begin on December 31, 2012. 

COLA increases are now such an accepted feature of Social Security that it is difficult to imagine a time when there were no COLAs. 

Payment of monthly Social Security benefits began in January 1940. At that time, and for many years afterward, cost-of-living adjustments did not exist. A person’s benefit amount when starting Social Security was the amount they could expect to receive for life.  

It was not until the 1950 Amendments that Congress first legislated an increase in benefits. Beneficiaries at the time had their payments recomputed effective for September 1950 and increases appeared for the first time in the October 1950 checks. A second increase was legislated for September 1952. Together these two increases almost doubled the value of Social Security benefits for existing beneficiaries. From that point on, benefits were increased only when Congress enacted special legislation for that purpose.  

Legislation In 1972 changed this by providing, beginning in 1975, for automatic cost-of-living adjustments (COLAs) based on the annual increase in consumer prices.

 

Will there be a 2013 COLA for SSI?

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Q: Will there be a 2013 cost-of-living adjustment (COLA) for SSI?

A: Yes. The October announcement about the 1.7 percent cost-of-living adjustment (COLA) for 2013 included both monthly Social Security and Supplemental Security Income (SSI) benefits. COLA changes will be in the Supplement Security Income payment received on December 31, 2012. COLA changes to Social Security will begin with benefits received in January 2013. 

Supplemental Security Income (SSI) pays benefits to disabled adults and children who have limited income and resources. SSI benefits also are payable to people 65 and older without disabilities who meet the financial limits. See SSA publication 05-11000, Supplemental Security Income for program information.

Due to the COLA increase, in 2013 the maximum Federal Supplemental Security Income amount for an individual will increase to $710 per month compared to the 2012 maximum of $698. For an eligible couple, where both wife and husband receive SSI, the 2013 maximum amount is $1,066, up from the 2012 maximum of $1,048. Individual states can add to these amounts if desired.

These are maximum Federal amounts. Including Social Security benefits, other income reduces these SSI maximums. As of October 2012, approximately 8,278,000 people of all ages received Supplemental Security Income benefits. Of this number, 2,788,000 received both Social Security and SSI.

Including all national Supplemental Security Income recipients, whether child or adult or based on disability, blindness or age, as of October 2012, the average monthly SSI payment was about $516.

Allowable Supplemental Security Income resource levels are not changing in 2013. They remain at $2,000 for an individual and $3,000 for an eligible couple.  

Details concerning what is included as income or resources for Supplemental Security Income is not changing in 2013 compared to 2012. Not all income or resources are counted for SSI purposes.  For example, the home you live in is not included.

Learn more about Supplemental Security Income at http://www.socialsecurity.gov/pgm/ssi.htm. To apply, telephone the national Social Security toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, between 7:00am – 7:00pm, local time, or contact your local Social Security office.

 

Receiving Social Security? Work in 2011? Read this.

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As recently as last week, several times I have mentioned that ongoing employment after retirement has the potential to increase your Social Security benefit. 

To determine if payment amounts should increase, work records of everyone receiving Social Security benefits are automatically reviewed each year that new earnings are posted to their record. 

To increase monthly Social Security benefits, your new earnings have to be higher than earnings in a year already used to compute your retirement amount. If not higher than earnings already used, new wages will not change your existing amount. Your best 35 years of gross wages and net self-employment earnings, weighted for inflation, are used to compute your Social Security retirement amount.

An initial computer run to add in new wages and self-employment earnings for 2011 has been completed. Most people who are due a benefit rate increase based upon additional earnings for 2011 or earlier will receive the increase in their Social Security benefit for November 2012. Remember that the Social Security payment for November is received in December. Related retroactive increases covering earlier months of 2012 will also be included in the benefit for November.

More than retirement benefits could be involved. For example, if a person died during 2011 or earlier in 2012, it is possible that ongoing Social Security survivors benefits on that record could increase due to 2011 earnings if they were not previously obtained.

This automatic initial computer run has identified and processed many, but not all, of the cases where an increase because of 2011 earnings is due. Individual case records requiring additional review are always present, to be processed on an ongoing basis.

Individuals receiving a benefit increase based on the addition of 2011earnings will receive a letter explaining the increase.  

Any increase from the addition of 2011 earnings is separate from the upcoming Social Security cost-of-living adjustment (COLA) increase. The 1.7 percent COLA increase will begin with benefits that more that 56 million Social Security beneficiaries receive in January 2013. Separate letters are being mailed to explain COLA related changes.  

Reminder: To receive letters about your benefits, one of your reporting responsibilities is to notify Social Security when your mailing address changes, even though your payments are electronically received by direct deposit. Social Security benefit notices are sent by surface mail through the U.S. Postal Office, not by email.

Social Security 2013 annual earnings test

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In 2013, how much can you earn before Social Security retirement benefits are reduced?  

The annual earnings test, also known as the retirement test, concerns how your own employment earnings in a year affect your Social Security retirement, or other Social Security benefits, payable in that year. The earnings test includes only your personal gross wages or net self-employment for the full calendar year. Your other income, or income of a spouse, is not included.  

Three annual earnings levels exist, all based on your full retirement age (FRA).  If born in1943-1954, full retirement age is 66. Learn your FRA at http://www.socialsecurity.gov/retire2/.  

Earnings test amounts for calendar year 2013 are changed from 2012. They are:  

  • If under full retirement age (FRA) for the entire calendar year, $1 in benefits will be deducted for each $2 earned above the 2013 limit of $15,120.
  • If you reach FRA in 2013, $1 in benefits will be deducted from each $3 earned above the 2013 limit of $40,080, but only for earnings before the month you reach FRA.
  • No earnings limit exists starting with the month you reach full retirement age.

Do you plan to start Social Security retirement in 2013? Often people retiring mid-year have already earned over the annual limit for their age. To allow the start of Social Security retirement regardless of expected calendar year earnings, there is a special one-time rule based on monthly earnings. This rule applies for one year, usually the first year of retirement, and lets people receive Social Security payments for months that they are retired.

For example, a person retiring in 2013, at least age 62 but younger than full retirement age the entire year, can receive retirement for months that gross wages do not exceed $1,260 even though calendar year earnings will be above retirement test amounts. Similar rules apply for self-employment. 

Learn about the earnings test at http://www.socialsecurity.gov/retire2/whileworking.htm. At present, 2012 information is there, but this is where 2013 earnings test information will be located. Earnings test amounts for 2013 are included with changes related to the 2013 cost-of-living-adjustment (COLA) at http://www.socialsecurity.gov/pressoffice/factsheets/colafacts2013.htm.

More about the special, one-time, monthly test is at http://www.socialsecurity.gov/retire2/rule.htm. 

The earnings test does not apply to people receiving SSA benefits due to their own disability. If receiving benefits due to your own disability, contact Social Security before starting to work.

Medicare changes for 2013 not yet announced

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Questions about potential change to the Medicare Part B (Medical) premium started coming in once the 2013 Social Security cost-of-living adjustment (COLA) was announced.  

As of today, Medicare premium and related Medicare information for 2013 is not yet available. When announced, the information will be at www.medicare.gov. 

Medicare premiums are established differently than Social Security COLAs. The Social Security cost-of-living adjustment (COLA) is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year.

The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. By law, it is the official measure used by the Social Security Administration to calculate cost-of-living adjustments (COLA). If there is no increase in the CPI-W Consumer Price Index, there can be no COLA. Based on that measure, monthly Social Security and Supplemental Security Income (SSI) benefits will increase 1.7 percent in 2013. 

The 1.7 percent COLA will begin with benefits that more than 56 million Social Security beneficiaries receive in January 2013. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2012. Overall, benefits will increase by the COLA amount. Since the exact computation is more complex, some individual variation will occur. 

Medicare Part B (Medical) premiums are established differently. Unlike the Social Security COLA, the CPI-W plays no part in the computation of the Medicare Part B premium. 

The Medicare Part B premium changes each year, if necessary, so that the premium is sufficient to fund approximately 25 percent of the projected cost of the Part B program. Any premium change is effective in January. When announced, the information will be at www.medicare.gov.  

Medicare is administered by the Centers for Medicare & Medicaid Services (CMS), a component of the Department of Health & Human Services (DHHS). 

On a different Medicare topic, remember that the Medicare Part D (Prescription Drug Coverage) open season is from October 15 to December 7, 2012. New plans begin January 1, 2013. Everyone currently enrolled in Medicare can purchase a Part D plan to help with prescription drug costs.  

Unlike Medicare Part A (Hospital) or Part B (Medical), Part D (Prescription Drug Coverage) is purchased through private insurers. You shop for the plan that best suits your personal needs. Joining a Medicare prescription drug plan is voluntary, and participants pay an additional monthly premium for the coverage. 

To compare plans, go to the Medicare website, www.medicare.gov, and select the Drug Coverage (Part D) link. Use the free Medicare Plan Finder to compare plans available in your state. Plan data for 2013 is already on the Medicare Plan Finder. The Medicare Part D (Prescription Drug Coverage) open season is from October 15 to December 7, 2012. 

 

Supplemental Security Income (SSI) questions

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I have been holding several questions about the Supplemental Security Income (SSI) program. They are today’s topic. 

Q: Is Supplemental Security Income (SSI) a new program?

A: Not at all. The SSI program was signed into law by President Nixon as part of the Social Security Amendments of 1972. SSI benefits were first paid in 1974. 

The SSI program makes payments to people with low income and limited resources who are age 65 or older or are blind or have a disability, including children. Although the Social Security Administration manages the Supplemental Security Income program, SSI is not paid for by Social Security taxes. SSI is paid for by U.S. Treasury general funds. The two programs are very different.

Q: If the parent of a minor gets Supplemental Security Income disability, will his or her minor child also get SSI?

A: The SSI program does not provide for family benefits. Benefits are not payable to a minor child, or any other family member, just because a parent or spouse is eligible for SSI. It is possible for more than one member of a family to receive SSI if each individually meets the requirements. For example, if both members of a couple are over age 65, and each meet the income and resource rules, then both can receive SSI.

Q: Do children get the same SSI payment amount as an adult?

A: There is one standard, monthly, federal SSI payment amount, whether the eligible person is a child or adult, aged or disabled. Actual monthly amounts received by an individual depend on several factors including their own other income, family income, and living arrangements. Individual SSI amounts can frequently change based on these factors.

Q: Is Supplemental Security Income easier to get for a child compared to an adult?

A: These are two different decisions. An adult could be eligible to receive SSI based on age, blindness or disability. A child could be eligible based on either blindness or disability. For either, all income and resource levels must be met prior to any medical decision being made. For example, family income can make a disabled child ineligible. To be medically disabled for SSI, a child under age 18 must, in part, have a medically determinable physical or mental impairment or impairments, which result in marked and severe functional limitations. When a child turns age 18, he or she must meet the definition of disability for an adult. The adult definition of disability is the same for Supplemental Security Income and Social Security. 

Q: How much is the Supplemental Security Income benefit amount?

A: In 2012, the standard, monthly federal amount is $698 for an individual and $1,048 for an eligible couple. Based on this weeks 1.7 percent cost-of-living-adjustment (COLA) announcement, in 2013 this will increase to a monthly maximum of $710 for an individual and $1,066 for an eligible couple. Other income, including from Social Security benefits, reduces this amount. Different types of income reduce the standard amount in different ways. Some states add state funds to the federal amount. 

Basic information about Supplemental Security Income (SSI) is at http://www.socialsecurity.gov/pgm/ssi.htm  and in publication 05-11000.To learn more or apply, contact Social Security. Call the Social Security national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778) or contact your local office. 

Applications for Supplemental Security Income (SSI) cannot be fully completed online because the person must talk to a Social Security representative. However, medical reports for SSI applications involving blindness or disability, for either an adult or child, can be completed online.  See http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/270.

 

SSA Cost-of-Living-Adjustment for 2013 Announced Today

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Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 62 million Americans will increase 1.7 percent in 2013, the Social Security Administration announced today. 

The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 56 million Social Security beneficiaries receive in January 2013. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2012. 

Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $113,700 from $110,100. Of the estimated 163 million workers who will pay Social Security taxes in 2013, nearly 10 million will pay higher taxes as a result of the increase in the taxable maximum. 

Information about Medicare changes for 2013, when announced, will be available at www.Medicare.gov. For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums.   

The Social Security Act provides for how the COLA is calculated. Read more at www.socialsecurity.gov/cola.  

A fact sheet showing the effect of the various automatic adjustments for Social Security and Supplemental Security Income is at http://www.socialsecurity.gov/pressoffice/factsheets/colafacts2013.htm 

Medicare Premiums & Deductibles for 2012

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Medicare premiums and deductibles for 2012 have been announced by the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS).  Of special interest is that the Medicare Part B (Supplemental Medical Insurance) premium will be $99.90 per month in 2012, a decrease of $15.50 over the 2011 base premium of $115.40.  

Depending on when they enrolled in Medicare, a person might now be paying a Part B base premium amount of $96.40, $110.50 or $115.40 so the new 2012 amount can reflect either increase or decrease.   The reason is related to Social Security benefit cost-of-living adjustments (COLA).  

By law, Social Security benefits are adjusted automatically to keep pace with inflation. However, as in 2010 and 2011, when there is no COLA increase in Social Security benefits, there could still be a Medicare Part B premium increase.  There is a provision in the law referred to as “hold harmless” that protects most, not all, Social Security beneficiaries from a reduction in their net monthly SSA benefit based on an increase in the Medicare Part B premium. Due to this provision, about 75 percent of SSA beneficiaries did not see a reduction in their monthly benefit over the past two years even though the Medicare Part B premium increased in 2010 and 2011.

 Some higher income Medicare beneficiaries have Part B premiums above the base premium level.  The “hold harmless” provision does not include them.

 A Centers for Medicare and Medicaid Services (CMS) fact sheet contains detailed information about Medicare premiums and deductibles for 2012.  Read it at http://www.cms.gov/apps/media/fact_sheets.asp.   Charts presenting 2012 information on also on the Medicare website, www.medicare.gov. 

 

Social Security Cost-of-Living Adjustment (COLA)

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On October 19th, Social Security announced a 3.6 percent benefit increase for 2012.  Here is the official SSA press release, also at www.socialsecurity.gov.   Note the section:  Information about Medicare changes for 2012, when announced, will be available at www.Medicare.gov.  For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums. 

News Release

SOCIAL SECURITY
 Social Security Announces 3.6 Percent Benefit Increase for 2012
 Cost-of-Living Adjustment is First Since 2009

Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase 3.6 percent in 2012, the Social Security Administration announced today.

The 3.6 percent cost-of-living adjustment (COLA) will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012.  Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011.

Some other changes that take effect in January of each year are based on the increase in average wages.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800.  Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum. 

Information about Medicare changes for 2012, when announced, will be available at www.Medicare.gov.  For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums.  

The Social Security Act provides for how the COLA is calculated.  To read more, please visit www.socialsecurity.gov/cola. 

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For a chart showing the 2012 information, see http://www.ssa.gov/policy/docs/quickfacts/prog_highlights/RatesLimits2012.pdf