No cost-of-living increase in Social Security in 2016

With consumer prices down over the past year, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 65 million Americans will not automatically increase in 2016.

The Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). 

The period of consideration includes the third quarter of the last year a cost-of-living adjustment (COLA) was made to the third quarter of the current year.  As determined by the Bureau of Labor Statistics, there was no increase in the CPI-W from the third quarter of 2014 to the third quarter of 2015.  Therefore, under existing law, there can be no COLA in 2016.

Other adjustments that would normally take effect based on changes in the national average wage index also will not take effect in January 2016.  Since there is no COLA, the statute also prohibits a change in the maximum amount of earnings subject to the Social Security tax, as well as the retirement earnings test exempt amounts.  These amounts will remain unchanged in 2016.  The attached fact sheet provides more information on 2016 Social Security and SSI changes.

The Department of Health and Human Services has not yet announced Medicare premium changes for 2016.  Should there be an increase in the Medicare Part B premium, the law contains a “hold harmless” provision that protects approximately 70 percent of Social Security beneficiaries from paying a higher Part B premium, in order to avoid reducing their net Social Security benefit. 

Those not protected include higher income beneficiaries subject to an income-adjusted Part B premium and beneficiaries newly entitled to Part B in 2016.  In addition, beneficiaries who have their Medicare Part B premiums paid by state medical assistance programs will see no change in their Social Security benefit.  The state will be required to pay any Medicare Part B premium increase.

Information about Medicare changes for 2016, when available, will be found at http://www.medicare.gov .

For additional information, please go to http://www.socialsecurity.gov/cola