Cost-of-Living Adjustment (COLA) Information for 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.
Frequently Asked Questions
What is a cost-of-living adjustment (COLA)?
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
Who determines the CPI-W?
The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. By law, it is the official measure used by the Social Security Administration to calculate COLAs.
Will the retirement earnings test exempt amounts change in 2016?
No. The earnings limit for workers who are younger than "full" retirement age (age 66 for people born in 1943 through 1954) will remain $15,720. (We deduct $1 from benefits for each $2 earned over $15,720.)
The earnings limit for people turning 66 in 2016 will stay at $41,880. (We deduct $1 from benefits for each $3 earned over $41,880 until the month the worker turns age 66.) There is no limit on earnings for workers who are "full" retirement age or older for the entire year.
Will my Medicare premiums increase in 2016?
Information about Medicare changes for 2016 is available at www.Medicare.gov.
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.
How long has Social Security had COLAs?
Congress enacted the COLA provision as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975. Before that, benefits were increased only when Congress enacted special legislation.