Social Security Recipients Might Actually Get to Keep Their 2023 Raise

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One of the greatest benefits of Social Security is that payments are adjusted annually according to the cost of living (COLAs). When inflation is high — as seniors have seen in recent years — these COLAs cause monthly checks to rise in January to help retirees’ purchasing power keep pace. The 2022 COLA increased benefits by 5.9% this year, and early estimates make it likely that the COLA that takes effect in early 2023 will be between 8% and 9%.

What’s even better news is that, unlike 2022, many Social Security recipients are more likely to see the full amount of their cost-of-living adjustment actually show up in their bank account. That’s because the impact of another important program for older Americans, Medicare, will likely reverse the painful blow it dealt participants at this time last year.

How Medicare Took Much of Social Security from 2022 COLA

The 5.9% COLA that went into effect in early 2022 increased benefits for about 70 million Americans. For the typical Social Security retiree, the upward adjustment increased median benefits by about $90 to $1,614 per month.

Image source: Getty Images.

But even those who qualified for those benefits didn’t see their actual checks rise that much. That’s because the Social Security Administration automatically withholds Medicare premiums for those recipients who are enrolled in Medicare.

In 2022, increases in Medicare costs for retirees were extremely high. Medicare Part B premiums rose 12.7% in 2022, from $148.50 in 2021 to $170.10 this year. That took $21.60 a month away from that $90 average benefit increase.

According to the Centers for Medicare and Medicaid Services, much of the increase came from a single factor: the biogen Alzheimer’s drug Aduhelm. Early on, the program expected it could eventually cover the full cost of the drug for Medicare participants, which was $56,000 at the time. That estimate was baked into the announced Part B premium for 2022.

Can Social Security recipients take a break?

It wasn’t too far into 2022, though, before Biogen blinked, and the announced price for Aduhelm nearly halved to $28,200. The Medicare program also limited coverage only to patients in authorized clinical trials, dramatically reducing overall costs.

The Secretary of Health and Human Services was criticized for what then appeared to be a significant overload on monthly premiums and responded in May by telling Medicare participants that it would not be feasible to cut premiums mid-year due to legal and operational hurdles. However, the government said the 2023 Part B premium would eventually be adjusted downwards to take into account the lower costs associated with Aduhelm.

By actuarial estimates at the time, the downward impact on Medicare premiums could be between $5 and $10 per month. That would be possible to add another $5 to $10 on top of whatever the monthly impact of the COLA in 2023 turns out to be.

Don’t spend that money yet

Unfortunately, healthcare costs have not been immune to inflationary pressures hitting the broader economy. Even as inflationary pressures eased in key areas such as energy in August, medical care prices actually rose 0.8% month over month.

That brought the 12-month increase to 5.6%. While that’s lower than the overall inflation rate, it could still serve to limit a downward adjustment in Medicare Part B premiums as a result of the Aduhelm situation.

Nevertheless, many Social Security recipients will be happy to keep the full amount of COLA they receive in their monthly benefits. If it turns out that a reduction in Medicare-related deductions contributes to their checks, it would just be the icing on the cake — and still not go too far in helping struggling seniors make ends meet.


The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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