Retirees are expecting to see the largest Social Security cost-of-living adjustment (COLA) in more than four decades when the number is released Thursday.
But just what portion of the increase will make its way to the wallets of those who get the payments?
Those getting Social Security benefits are wondering if they will get the full amount of the increase that will be in checks beginning in January and how much their checks will be going up.
Generally, those who sign up for Social Security benefits are also enrolled in Medicare, the government health insurance program aimed at seniors.
Most enrolled in the program will enroll in Medicare Part A, the program that pays for hospital visits, and Medicare Part B, the coverage for routine doctor’s visits.
Since the monthly cost of premiums for Medicare programs is deducted from Social Security benefits, that will cut into this year’s COLA.
However, some believe that the COLA could top 8%, giving those enrolled a bit of a cushion against rising costs.
Another factor that will save some money in 2023 is a decrease in the Part B premium. The premium will drop to $164.90 a month, $5.20 less than last year.
According to The New York Times, the decline in cost is related to a new Alzheimer’s disease drug called Aduhelm.
The drug is very expensive. It originally cost $56,000 per patient annually, but was reduced to $28,800 by the drug’s manufacturer, Biogen.
Aduhelm would be covered by Medicare Part B since it is administered on an outpatient basis. In 2022, Part B premiums were increased by 14.5%, in part to help cover the cost of the drug.
Since the cost of Aduhelm was lowered, the premium for Medicare Part B will be lowered.
“Medicare is reducing premiums for 2023 mainly to account for lower than expected spending on Aduhelm,” Tricia Neuman, executive director of the Medicare policy program at the Kaiser Family Foundation, told the Times.
The purpose of the Social Security COLA is to “ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation,” the agency says on its website.
According to the SSA, the COLA 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 to the third quarter of the current year.
The Bureau of Labor Statistics in the Department of Labor determines the CPI-W.
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