Social Security Recipients Could See a 3% Boost in 2024

by Warren Seah

New calculations on Wednesday suggest that Social Security recipients may receive a 3% cost-of-living adjustment (COLA) next year. The release of June’s consumer-price data indicates that inflation is continuing to cool.

Forecasted COLA Adjustment

According to The Senior Citizens League, the expected COLA adjustment for 2024 is projected to be 3%. This is notably lower than the 8.7% increase seen in 2023. Last month, the pro-senior think tank anticipated a COLA adjustment of 2.7% for next year. It is important to note that the group revises its forecast monthly.

Read: The Social Security COLA for 2024 could be 2.7%, down from 8.7%

Determining Factors for COLA

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) serves as the index used to establish the COLA. Based on the most recent data, the CPI-W rose by only 2.5% year over year. However, the average inflation rate over the past twelve months experienced a slight increase, leading to a projected COLA hike of 3% based on the June data. Mary Johnson, the Social Security and Medicare policy analyst at The Senior Citizens League, provided this analysis.

Impact of a 3% Increase

Should a 3% increase in COLA occur, it would raise the average monthly Social Security benefit, currently standing at $1,787, by a little over $53.

Pending Medicare Premium Announcement

It is important to note that Social Security recipients will not have certainty regarding the payment increase until the announcement of Medicare Part B premiums. These premiums are automatically deducted from most beneficiaries’ Social Security benefits. In previous years, the Part B premium increase has sometimes absorbed the majority, or even the entirety, of the COLA. This leaves little else to cover other rising expenses, as noted by Mary Johnson.

Overall, the projected 3% COLA adjustment for 2024 provides a welcomed boost for Social Security recipients, although the impact may vary depending on Medicare premiums and other factors.

Medicare Premiums Expected to Increase

According to the annual report of the Medicare Trustees, released in March of this year, monthly Part B premiums are projected to rise to $174.80 in 2024, up from $164.90 in 2023.

Potential Impact of New Alzheimer’s Drug

One of the significant factors contributing to this increase is the coverage of a new Alzheimer’s drug called lecanemab, marketed as Leqembi. Without insurance, this drug is anticipated to cost around $26,000 per year.

The projected spending estimates suggest that the expenses associated with administering and monitoring this drug’s potential side effects would add approximately $5 per month to the Part B premium for every beneficiary. As a result, the premium for 2024 could reach about $179.80 per month. This potential increase of nearly $15 per month from 2023 could affect most beneficiaries. Furthermore, there are other costs that may drive Part B premiums even higher.

Affordability Concerns

While the forecasted COLA (Cost-of-Living Adjustment) indicates a challenging affordability outlook for some individuals, it remains manageable for the majority of Medicare beneficiaries. However, if inflation continues to slow and the COLA for 2024 is lower than anticipated, there is a risk that the Part B premium increase may surpass the amount of COLA increases. This could particularly impact those with the lowest Social Security benefits.

It is essential for Medicare beneficiaries to remain informed about these potential cost adjustments and prepare for any changes that may occur in the coming years.

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