BLUEFIELD — Although Social Security recipients will receive a 1.6 percent COLA (cost of living adjustment) for 2020, the extra money may quickly be absorbed by other rising costs, including Medicare supplement plans and medications.
“The Medicare supplement care plans can go up in lockstep,” said Brian Beck, Chief Financial Officer with the Appalachian Agency for Senior Citizens in Cedar Bluff, Va., adding that drug expenses keep rising. “It (the COLA) is good, but if you are comparing your actual expenses, they are increasing as well and not holding steady with the real burden with medications.”
Beck said the cost of drugs is the “bigger issue” and those rising expenses continue to create challenges for seniors who are living on a fixed income.
According to a report by the AARP (American Association of Retired Persons), between 2016 and 2017 retail prices for 267 brand name prescription drugs widely used by older Americans, including Medicare beneficiaries, increased by an average of 8.4 percent.
In contrast, the report said, the general inflation rate was 2.1 percent over the same period. Brand name drug prices have routinely increased much faster than general inflation over the past 14 years.
Dr. Rebecca Bivens, coordinator of the Region IV Aging and Disability Resource Center (ADRC) in Princeton, said a possible increase in Medicare Plan B, which is automatically deducted from Social Security checks, has not yet been announced, but if it is increased next year, the extra cost cannot exceed the COLA.
Those already on Medicare benefit from a “hold harmless clause,” she said
“The hold harmless provision that occurs when there is a COLA insures that no one’s Part B premiums are raised more than they get for the COLA,” she said.
For example, the SSA (Social Security Administration) said the COLA increase for 2020 amounts to $24 a month for the average retired worker.
The increase in the Part B premium for the average worker could be no more than $24 a month, although it is usually much lower than that.
From 2018 to 2019 the premium rose $1.50 a month.
Those who are now enrolling for the first time will pay the full amount for Part B, including any increase.
The cost of other Medicare supplements purchased through private insurers is a separate issue, she said, and any increases there are done by the insurance companies.
Bivens also said that seniors who purchase other supplements or who need to make any adjustments to their current benefits should visit her office.
“Open enrollment started this week and goes through Dec. 7,” she said, adding that this is the time to make those changes.
She also advises anyone who is contemplating purchasing Medicare supplements to learn more about them first.
Some advertised on television are “very misleading,” she said, and seniors can find themselves signed up when they may not have intended to do so.
“All of those commercials get seniors confused,” she said. “They sign up for plans and did not know what they did.”
Bivens said her office can help make sure they have the best plan.
“We give a completely unbiased opinion,” she said. “We help a lot of people.”
Bivens said anyone receiving benefits or planning to sign up can call her office, located on the second floor of the Law Building across from the Mercer County Courthouse in Princeton, and ask questions or set up an appointment to talk with someone in person.
“This (open enrollment) is a busy time of year for us,” she said for those who want to come in. “I would recommend calling and scheduling an appointment.”
The number for the ADRC is 304-425-2040.
The Senior Citizens League, based in Washington, D.C., advocates for higher COLAs because they do not cover other rises in living expenses.
Mary Johnson, a Social Security policy analyst for the league, said on the league’s website that “adequate COLAs are critical to retirement security,” with Social Security one of the only types of retirement income that can provide this essential protection against rising costs.
“When a retiree’s costs rise faster than their COLA, the buying power of Social Security benefits erodes, leaving people with a benefit that doesn’t go as far as it did when they first retired,” Johnson said.
According to research by Johnson, Social Security benefits have lost 33 percent of buying power since 2000.
The Senior Citizens League supports legislation that would require a minimum COLA of no less than 3 percent, even in years when inflation falls below that amount.
“Strengthening the COLA would help slow the drain of drain of retirement savings and help keep older Americans out of poverty,” she said.
The Social Security Administration (SSA) announced the COLA last week, saying the increase will be seen by more than 63 million SS beneficiaries in January 2020 with Increased payments to more than 8 million SSI (Supplemental Social Security Income) beneficiaries will begin on Dec. 31, 2019.