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“Medicare and Social Security are two of the most important federal programs. We must look for honest and direct ways to protect benefits for those currently receiving them, for baby boomers, and for future generations to come without bankrupting the country in the process.”
Social Security touches the lives of virtually every American. However, this important program will experience financial difficulty in coming years. While people are living longer, that also means they are receiving benefits for a longer time than ever before. We are also having fewer children, so there are fewer people paying the taxes necessary to fund the benefits. And in 2010, the baby boom generation began to retire, resulting in more people receiving Social Security benefits than ever before.
The Old-Age, Survivors, and Disability Insurance (OASDI) program makes monthly income available to insured workers and their families at retirement, death, or disability. The number of people receiving Social Security Disability Insurance (DI) has ballooned by nearly 40% over the past decade. The DI Trust Fund is expected to run out of money in 2016.
In addition to that, the Old-Age Survivors Insurance (OASI) Trust Fund is already projected to be fully depleted in 2034. Combined, the OASDI Trust Fund is expected to be financially insolvent in 2033.
The consequences of these changes in our population must be confronted honestly and directly. We must look for ways to protect benefits for those receiving them now and for those who will turn retirement age over the next several years. At the same time, we must also look for ways to ensure that younger workers can receive benefits without huge tax increases or dramatic cuts in benefits for everyone.
Social Security Cost-of-Living Adjustment (COLA)
I know many of you are concerned with the Social Security cost-of-living adjustments (COLA), and there is some misinformation being circulated on this issue.
To compensate for the effects of inflation, Social Security law provides that recipients receive a COLA in January of each year. The amount of the COLA is determined by the Bureau of Labor Statistics using a formula based on the Consumer Price Index. The formula has been used since 1975. Congress does not vote on the formula or on the COLA for any particular year.
It was announced on October 22, 2014, that Social Security Income (SSI) beneficiaries would receive a 1.7 percent COLA increase for 2015. These payments began on December 31, 2014. The official determination of the next year’s COLA is made on October 15 each year. There is no way to predict now what the COLA may be for 2016. There have been suggestions that the current formula does not accurately measure the true cost-of-living for senior citizens. I agree that Congress should examine that issue.
Current law also prevents most Medicare beneficiaries from paying higher Part B premiums when there is no Social Security COLA.
Despite what you may have heard, Members of the House and Senate have not received any pay raise or COLA since 2009.
There is much work to do to ensure that Social Security and Medicare remain strong for years to come.