What You Need to Know About 2024 Medicare and How It May Affect Social Security Cost of Living Adjustment
Starting January of 2024, tens of millions of older folk will be seeing a decent increase in their Social Security benefits from the COLA, or cost-of-living adjustment. It will be a 3.2% raise as an adjustment for the rise in the average cost of living to meet the higher prices of food, fuel, and many other services that have been jacked up from inflation. This averages a $54 increase per month, at least according to government estimates. It’s nothing jaw-dropping, but to many Americans, it can make a substantial difference in their lives.
The percentage raised is lower than last year, but given the COLA is tied to the Bureau of Labor Statistics’ Consumer Price Index, which takes in the annual prices of necessities every year and calculates the rise (or fall) in overall price hikes. Essentially, it’s a calculator for inflation, and anyone can go online and use it. As of late, inflation has been starting to plateau, and because of that, there has been no need to maintain the steep upward slope in the COLA. Some people are calling for a change in the index being used, suggesting one that is instead calculated off of the spending patterns of the elderly. As of now, though, the CPI is here to stay.
Back on the subject of Social Security, there are worries that have begun to arise, particularly from Kathleen Romig, the director of Social Security and Disability Policy at the Center on Budget and Policy Priorities, as well as a large voice drawing attention to the potential dangers Social Security is in. Why? Well, it’s about Medicare. According to her, increased Medicare premiums in 2024 will “absorb a disproportionate share of the COLA for most people.” She’s referring to Medicare “Part B”, which covers services such as doctor’s office visits, the premium to pay for it will usually come from social security checks.
The monthly premium for such coverage is said to climb to 6%, according to The centers for Medicare and Medicaid Services. That’s a climb from $164.90 to $174.70, nearly a $10 out-of-pocket increase per month.
With medical prices increasing faster than overall inflation, the price hike will disproportionately affect seniors and those with disabilities, as they tend to spend more of their income on medical needs. People will still be getting higher benefits checks overall, but the hike in Medicare premiums certainly diminishes the canceling effect the adjustment is meant to have on cost-of-living expenses.
Being able to maintain Social Security while still adjusting for cost-of-living is not easy in the slightest. The Social Security program covers more than 71 million people, granting benefits to seniors, the disabled, survivors of workers who have passed, and the dependents of current beneficiaries.
Like many of the United States’ services, Social Security is funded by payroll taxes. People who work help those who are unable to. A good chunk of the money goes to help those currently on benefits, and any money leftover gets stored in the Social Security trust fund. This money helps millions of Americans survive each year.
The amount of money someone receives depends from person to person. The government calculates a percentage of the top 35 years of earning, also factoring in when you decide to retire and start collecting benefits. So, someone who worked a higher-paying job is likely to receive more benefits than someone who hasn’t been able to work due to their disability.
Despite this system that has done well in the past, as demographics continue to shift, the trust has begun to take on a more negative trend as of late.
One concern people who depend on Social Security have is whether or not the trust is running out of money. It’s been long speculated that this is where things are leading, and this is mainly due to demographic shifts. Birthrates are declining, ergo fewer people are working, ergo there is less income into the government through payroll taxes. All the while, more seniors are retiring, therefore more people are collecting Social Security. This isn’t just speculation from the public or the media, either.
According to the annual Social Security and Medicare trustees report, starting 2033 the program’s trust will no longer have enough money to pay for full benefits. Once that trust is finally depleted, the government will only be able to pay for 77% of benefits.
This situation is only if the government does not address this shortfall. However, in this situation, there are no clear cut solutions; decreasing the annual COLA will only harm those who depend on Social Security, and good luck increasing payroll taxes. Despite this, if we’re to take care of those who once cared for us, a solution needs to be found, and soon.