No COLA Increase in 2016

by Ben Wainwright 30. October 2015 13:00
The Internal Revenue Service (IRS) recently announced that for only the third time in 40 years, there will not be a cost of living adjustment (COLA) for Qualified Retirement Plans in 2016. COLA is tied very closely with Social Security (SS), and as a result Social Security beneficiaries will not receive an increase in their monthly benefits. However, due to the hold-harmless provision[1], anyone whose Medicare costs are deducted from their SS benefits will not see an increase in their monthly premium. Indeed, the last decade has seen small increases for SS beneficiaries—the total COLA increase over the past 8 years has only been 14.3%, compared to nearly 70% in the first eight years that it was introduced. Due to the lack of a cost of living adjustment, many Medicare beneficiaries will not see an increase in their benefits. In fact, it is expected that roughly 30% of Medicare Beneficiaries will see an increase in the cost of Medicare. The groups of Beneficiaries expected to be impacted include: · New Enrollees · Enrollees that do not receive SS benefits · Enrollees with higher incomes As a result of this Medicare cost increase, AARP and 70 other consumer advocacy groups has asked Congress to extend the hold-harmless provision to all Medicare beneficiaries; not just the 70% who currently receive Medicare Part B and are eligible for the provision. AARP sent Congress a letter on October 14th, 2015 urging them to extend the provision before it goes into effect on January 1st, 2016. For a summary of the Cost-of-Living Adjustments by Code Section for the past 5 years, follow the link: [1] A legal statement prohibiting an increase to Medicare B premiums for the vast majority of American citizens. The Medicare hold harmless provision ensures that Medicare B premiums cannot rise more than the previous year's cost of living increase in Social Security benefits.
Categories: Assurance