Fact Sheet
Consumer
Price Index Fix
- The Social
Security Administration (SSA) will be issuing one-time payments
in mid-July to about 45 million Social Security beneficiaries
and approximately six million Supplemental Security Income (SSI)
beneficiaries. These payments will ensure that beneficiaries
are compensated for any shortfall in their benefits paid from
January 2000 through July 2001 as a result of an error the Bureau
of Labor Statistics (BLS) made in the calculation of the consumer
price index (CPI) starting in 1999.
- Regular
monthly benefits, if affected, will be adjusted beginning with
the payment received in August 2001.
- Beneficiaries
will receive a written explanation of their one-time payment
and an explanation about their adjusted monthly benefit. This
process will occur in mid-July 2001 and will be automatic. Beneficiaries
do not need to take any action to receive their adjusted benefits.
Background
on the CPI Error
- On September
28, 2000, the BLS, an agency in the Department of Labor, announced
that an error had occurred in the computation of the CPI. For
more information, go to: http://www.bls.gov/cpi/cpirev01.htm.
Effect
of the CPI Error
- By statute,
SSA uses the CPI, as published by BLS, to calculate annual increases
in benefit levels for Social Security and SSI payments.
- As a result
of the CPI error, the December 1999 cost-of-living adjustment
(COLA)--paid in January 2000--was one-tenth of one percent below
what it would have been had the error not occurred. As a result,
the COLA applied to Social Security and SSI payments was 2.4
percent, rather than 2.5 percent.
- Most Social
Security and SSI beneficiaries have received lower payments,
since January 2000, than if there had been no CPI error. The
shortfall for the majority of beneficiaries is
$1 per month.
The
Fix
- In mid-July
2001, lump-sum retroactive payments will be issued to Social
Security and SSI beneficiaries. These payments, which will be
separate from regular monthly payments, represent the money
that beneficiaries would have been paid since January 2000 if
there had been no error in the CPI. Of course, retroactive benefits
will only be paid to individuals who actually received benefits
at some time between January 2000 and July 2001, and who were
affected by the December 1999 COLA.
- For the
majority, these payments will total up to $19, or $1 per month
for January 2000 through July 2001.
- Some Social
Security beneficiaries (those with higher monthly benefit payments)
will receive larger retroactive payments. These payments represent
an increase in monthly payments of $2, $3, or $4 to offset the
effect of the CPI error.
- In August
2001 and beyond, fully adjusted benefits will be issued. These
payments will include the amount due, based on the recalculated
CPI.
- The total
amount of retroactive payments to compensate for the shortfall
to beneficiaries is estimated to be $1.1 billion. This represents
adjustments to benefits paid for calendar year 2000 and calendar
year 2001 through July.
Note:
Some beneficiaries will only receive a retroactive payment and no
increase in their regular monthly payment. For example, some Social
Security beneficiaries will only receive $12 in retroactive payments,
$1 per month for calendar year 2000, but no retroactive payments
for calendar year 2001 and no increase in their regular monthly
payments because their benefit level for 2001 was not affected by
the CPI error. These payments will compensate for the shortfall.
In a small number of cases, beneficiaries will be due no retroactive
payment and no increase in their regular monthly payment because
they received no benefits in 2000, and their benefits in 2001 were
unaffected by the CPI error.
For answers to additional questions
about the CPI Fix visit our "Adjustments
to Compensate for the Consumer Price Index Error, Questions and
Answers."
|
www.socialsecurity.gov
