Seniors face higher health costs but stagnant Social Security payments

Tens of millions of seniors will see no annual cost-of-living adjustment in their Social Security checks next year, the government said Thursday, while at the same time about a third of people on Medicare could see record cost increases.

This is only the third time in 40 years - all of them during the Obama administration - that the Social Security Administration has not increased its payments.

The raises are tied to the consumer price index, and the government said the index has not increased enough this year, thanks largely to lower gas prices.

About 65 million retired and disabled workers, spouses and children collect Social Security benefits each month, the equivalent of about 1 in 4 households. Another 15 million are disabled veterans, federal retirees and their survivors and the disabled poor on the Supplemental Security Income program.

Dropping fuel prices are the biggest reason retirees aren't getting a raise, although that is likely to be small consolation for seniors. Because they don't commute to and from work, retirees often do not count gas costs as much of their expenses anyway.

'I think it's disappointing. There are just an awful lot of people who depend on Social Security for their total income,” said Bob Welsh, 89, of Iowa City, who has worked with the Older Iowans Legislature and the Johnson County Task Force on Aging.

'A lot of the people that I'm concerned about do not have cars. They just can't afford them,” he said. 'I just hope people become more sensitive to those who are really in need.”

While medical costs are increasing, consumer prices for a range of goods from food to housing have not risen enough overall to produce an increase in benefits, and have dropped from a year ago, say economists, who have predicted for months that there would be no cost-of-living increase.

The lack of a raise triggers other bad news for retirees: medical costs.

Most Americans have their outpatient care premiums for Medicare Part B deducted directly from their Social Security checks. The annual cost-of-living increase usually covers any increase to premiums. When it doesn't, a long-standing 'hold harmless” law protects about 70 percent of seniors from having their Social Security payments reduced.

But that leaves about 30 percent of Americans on Medicare to cover a hike to premiums that otherwise would be spread across everyone.

That group includes people new to Medicare, federal retirees who don't receive Social Security payments and about 3.1 million people with higher incomes.

Their premiums could rise by 52 percent, by about $54 a month to $159, according to the Medicare Trustees, and more for those with higher incomes.

Close to 70 groups representing seniors have been lobbying Congress for months to pass legislation to stop the increase in premiums for everyone. Democrats have introduced bills to freeze the Part B premium and deductible for 2016, but their chances of passage are uncertain.

Only twice before, in 2010 and 2011 since cost-of-living adjustments started, has there been no bump up in benefits.

Retirees did receive a 1.7 percent cost-of-living increase for 2015, 1.5 percent for 2014, 1.7 percent for 2013 and 3.6 percent or 2012.

Congress enacted automatic increases for Social Security beneficiaries in 1975, when inflation was high and there was pressure to regularly raise benefits.

Since then, increases have averaged 4 percent.

the Washington Post and Alison Gowans of The Gazette contributed to this report.