Social Security is a program highly beneficial to seniors and the disabled. Disability benefits are paid on the basis of a medical records review to ensure that only genuine cases receive the benefits. The program is very significant when it comes to ensuring a financial basis for eligible beneficiaries. More than 66 million Americans receive payments from Social Security. Most of these beneficiaries are seniors above the age of 65, others include the severely disabled and orphans. The SSA estimates that 62% of seniors depend on their monthly SS benefits to make up at least half of their income. Moreover, 34% rely on these benefits for 90 – 100% of their monthly income. These figures clearly indicate how important the program is for retired Americans.
The Good News
2018 comes with good news for SS beneficiaries – their checks are going up 2% this year, and this is the first sizeable raise in six years. Here are some facts to know:
- In 2018, Social Security recipients will receive a 2% COLA, which is the highest in 6 years.
This increase is because of the higher gasoline prices (resulting from the hurricanes Harvey and Irma closing down refining and drilling capacity in the Southern United States, and the Gulf of Mexico), which is one of the categories measures of inflation according to the SSA.
- The average retired worker who brings home $1,375.29 a month can expect an increase of $27.50 in his/her monthly income. This amounts to around $330 extra over the course of a year.
People who managed to steadily earn more than the maximum taxable earnings cap for 35 or more years can receive up to $2,788 a month at their full retirement age. This is an increase of $101 from 2017.
- For those who are working, the maximum taxable earnings cap for the payroll tax increased by $1,200 to $128,400. 12.4% payroll tax applies to all income earned between $0.01 and $128,400 in 2018 (these were $0.01 and $127,200 in 2017).
Concerns Exist for Senior Citizens
Social Security beneficiaries are mainly of two categories:
- Americans who are eligible for Medicare and are at present enrolled in the program. Members of this group have their monthly premiums deducted from their SS check.
- The second group comprises those who are not enrolled in Medicare and new Medicare enrolees for 2018. People who prefer to be directly billed by Medicare for their monthly premiums (instead of having their premiums automatically deducted from their monthly social security payout) also come under this group.
Medical care inflation has increased considerably over the past few years, outpacing increase in COLA. This inflation is seen particularly in the increasing Medicare Part B premiums. To protect seniors enrolled in Social Security and Medicare, the “hold harmless” clause was implemented. This clause ensures that Part B premiums of existing Medicare enrolees do not increase at a faster pace than their COLA. Social Security’s 0.3% COLA increase in 2017 kept Part B premiums from going up more than 0.3% in 2017 for about 70% of people. However, the bulk of the increase was passed on to the second group mentioned above, and they have seen their monthly Part B premiums increase by a high-single-digit, or maybe low-double digit, yearly percentage.
This will change in the year 2018.
- Part B Medicare premiums remain static at $134 a month.
- The second group will not see their premiums increase compared to the 2017 rates.
- On the other hand, the first group who have been protected by the “hold harmless” clause could see some part of their increase consumed by Medicare Part B in order to “draw level” with the lower premiums they have paid in years.
Another concern is the decline in the purchasing power of dollars, caused largely by increasing medical care costs and higher home/rental expenditures. Concerns have been raised from various quarters regarding the shortcomings in the SSA’s way of estimating inflation. To determine COLA, the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) measures the spending habits of working-age Americans. As a result, more emphasis is placed on education, food, dress, entertainment, and transportation. Housing and medical care expenditures are discounted. This latter expense constitutes the bulk of seniors’ spending, and since it is not given due importance the 2% COLA may not completely benefit senior citizens.
The Disability Scenario
Disability benefit thresholds are also increasing slightly in 2018. More than 10 million Americans receive disability benefits. There are maximum amounts of income people can still earn (thresholds) while receiving disability benefits. For the year 2018, these monthly thresholds are increasing as follows.
SSDI (Social Security Disability Insurance)
|Type of Disability||2017 Threshold||2018 Threshold|
Data source: Social Security Administration.
SSI (Supplemental Security Income)
Data source: Social Security Administration.
Over years of serving social security disability lawyers with medical review services, we understand how social security is a virtual lifeline for a vast majority of Americans. The Census Bureau points out that the monthly SS payments lifted more than 26 million Americans out of poverty in 2016, which gives it the status of the most effective anti-poverty the government has. Though doubts exist regarding the feasibility of the Social Security program, it is expected that lawmakers will adopt suitable measures (maybe in the form of benefit reduction or social security tax increase, or some combination of the two) to save this highly beneficial federal program.