Despite the biggest cost-of-living adjustment in decades, Social Security beneficiaries may still find it difficult to work their monthly checks further into next year.
Why: Inflation is continuing to drive up consumer prices, while standard Medicare Part B premiums will 14.5% increase in 2022 in a larger-than-expected leap.
The consumer price index, a government measure of price changes over time, up 6.2% year-on-year in October, marking the biggest increase in inflation in 30 years.
Standard Medicare Part B premiums will also be higher next year, in part because of a new, expensive Alzheimer’s drug.
That could affect how well people from the Social Security Administration 5.9% cost-of-living adjustment for the next year.
“Inflation is still outpacing COLA numbers right now,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, a nonpartisan senior group.
“If inflation is adjusted, purchasing power could improve,” she said.
Those with the lowest monthly Social Security benefits — about $366 per month — won’t increase at all next year, based on calculations by The Senior Citizens League. Higher benefits – about $2,870 per month – will increase by about 5.1%.
To plan for those changes next year – and make the most of a cost-of-living adjustment – there are a few things you should do now.
The Social Security Administration will provide a report on your official monthly benefits for the coming year.
In the meantime, you can calculate how much you can expect to receive on your own. Take your monthly benefit from this year and multiply it by 1.059 to determine the increase you’ll see from next year’s cost-of-living adjustment. Then subtract your estimated Medicare Part B premium based on your income.
Remember that people with income above certain levels will pay more for Medicare Part B due to an amount known as the Income-Related Monthly Adjustment Amount, or IRMAA.
The Social Security Administration typically begins mailing notices of new benefits in early December. However, most beneficiaries will be able to view that information through their online My Social Security Account.
You may still have time to find a better price on your health insurance through Medicare opens registration, which runs until December 7.
You can choose to join a Medicare Advantage plan, which provides Medicare benefits through a private insurance company.
By choosing a Medicare Advantage plan, you can find broader coverage for the same or as little price, says Sri Reddy, senior vice president of income and retirement solutions at Prime Finance Group. than the Part B premium you pay.
“You’re doing yourself an injustice if you don’t shop around and make sure you get the best coverage and the best price,” says Reddy.
According to Johnson, the variety of Medicare Advantage plans available will vary depending on where you live.
You can still make “significant savings” just by changing your Medicare Part D coverage for prescription drugs, Johnson said.
From year to year, the private insurers that run such plans may remove coverage for certain prescriptions entirely, or they may change their coverage, which can which means you will pay more for the same drug.
“There are any potential pitfalls,” says Johnson.
It is important to read the fine print before applying.
“If you catch a problem or an issue, it can save you hundreds or even thousands of dollars by switching to a more effective plan, or health or wellness plan,” says Johnson. your drug plan.
A 5.9% cost-of-living adjustment in 2022 will push your total allowance and income up. The result: Many of your Social Security benefits may be taxable.
This will affect you in tax year 2022 and is due in tax season 2023, Johnson said, meaning there’s time to plan ahead.
By consulting with a tax advisor, you can work to determine the best strategy for you. That could include getting more tax-deductible money from your Social Security benefits or your retirement account distribution, or making other adjustments.
Local senior centers may have tax experts available to help keep costs down, Johnson said. In addition, your local Agency on Aging can provide Medicare counseling services.
https://www.cnbc.com/2021/11/22/ways-to-protect-your-social-security-cost-of-living-adjustment-in-2022.html Ways to protect your Social Security cost of living adjustment in 2022