December 2020
Social Security Benefits Increase in 2021
Approximately 70 million Americans will see a 1.3 percent increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2021. Federal benefit rates increase when the cost-of-living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W).
The CPI-W rises when inflation increases, leading to a higher cost-of-living. This change means prices for goods and services, on average, are a little more expensive, so the cost-of-living adjustment (COLA) helps to offset these costs.
We have been mailing COLA notices throughout the month of December to retirement, survivors and disability beneficiaries, SSI recipients, and representative payees. If your clients want to know their new benefit amount before they receive their COLA notice, they can securely obtain their COLA notice online using the Message Center in my Social Security.
Your clients who already have a my Social Security account can opt out of receiving a mailed COLA notice and other paper notices. They can also receive alerts by text or email when there is a notice in the Message Center by updating their notification preferences.
Other changes based on the increase in the national average wage index also begin in January 2021. For example, the maximum amount of earnings subject to Social Security payroll tax in 2021 will be higher. The retirement earnings test exempt amount will also change in 2021. Your clients can read our COLA factsheet at www.ssa.gov/news/press/factsheets/colafacts2021.pdf.
Please encourage your clients to sign up for or log in to their personal my Social Security account at www.ssa.gov/myaccount. Your clients can find more information about the 2021 COLA at www.ssa.gov/cola.
How the Hold Harmless Provision Protects Your Client’s Benefits
We work together with the Centers for Medicare & Medicaid Services to make sure your clients won’t have a reduction in their Social Security benefits as a result of Medicare Part B premium increases. A special rule called the “hold harmless provision” protects their Social Security benefit payment from decreasing due to an increase in the Medicare Part B premium. The Part B base premium for 2021 is $148.50, which is $3.90 higher than the 2020 base premium.
Most people with Medicare will pay the new premium amount because the increase in their benefit amount will cover the increase. However, a small number of people will see little or no increase in their Part B premium — and their Social Security benefit checks will remain the same — because the amount of their cost-of-living adjustment isn’t large enough to cover the increase.
To qualify for the hold harmless provision, your client must:
- Receive Social Security benefits or be entitled to Social Security benefits for November and December of the current year.
- Have their Medicare Part B premiums for December and January deducted from their monthly benefits.
There are exceptions. The hold harmless provision does NOT apply to them if:
- They enroll in Part B for the first time in 2021.
- They pay an income-related monthly adjustment amount premium.
- They are dually eligible for Medicaid and have their premium paid by a state Medicaid agency.
Your clients can learn more by visiting Medicare at www.medicare.gov.
Who Do I Contact – Social Security or Medicare?
Knowing who to contact and when can save your clients time. Our new one-page publication — Who Do I Contact – Social Security or Medicare? — tells them exactly that:
Please share this resource with your clients as a quick reference for who to contact for what service.
Your Clients Can Do Much of their Retirement Planning Online
Our online retirement portal at www.ssa.gov/retirement is a great place for your clients to start mapping out their retirement plan. There, we provide important information that they should know. Your client may have questions like:
- When should I apply to start retirement benefits?
- What documents do I need to provide?
- Which factors affect my retirement benefits?
- What should I remember to do after I apply for retirement benefits?
Please remind them they can use their personal my Social Security account at www.ssa.gov/myaccount to get an instant estimate of their future retirement benefits. They can also see the effects of starting their retirement benefits at different ages.
Holiday Local Social Security Office Closings
If you plan to do business with us during the holiday season, our offices and phone lines will be closed to the public on Christmas Eve (December 24), Christmas Day (December 25), and New Year’s Day (January 1), but our online services are available every day.
Please visit www.ssa.gov/onlineservices for a list of our secure and convenient online services.
