For Medicare beneficiaries who receive Social Security benefits, the annual Cost of Living Adjustment (COLA) can offer some financial relief from increased costs and inflation. We have details on the 2024 adjustment.
Beneficiaries receive the annual COLA via their Social Security benefit checks. It’s also not unusual that the COLA affects Medicare Part B premiums. We’ll discuss this year’s adjustment and what it means for your Medicare clients.
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The 2024 Cost of Living Adjustment
The Social Security Administration has announced the COLA for 2024 will be 3.2 percent. This year’s adjustment is significantly lower than last year’s historic 8.7 percent adjustment.
To calculate the COLA, the U.S. Bureau of Labor Statistics uses data reported in the Consumer Price Index (CPI), which measures the costs of goods and services. According to the latest CPI, there was a 3.7 percent increase in inflation over the previous year.
What Changes Can Clients Expect?
A 2024 COLA increase of 3.2 percent means that your clients can expect to see an increase of about $59 in their Social Security benefit checks.
Typically, an increase in COLA foreshadows a rise in Medicare Part B premiums; however, this was not the case last year. Since Medicare premiums are directly removed from Social Security benefit checks, your clients could feel less financial relief from the adjustment if Medicare Part B premiums increase as well. This may force clients to rely more on savings than before.
Your clients should not panic, though; the hold harmless clause of federal law requires that “no increase in Part B premiums can reduce a Social Security recipient’s monthly check below what it was in the previous year.” Your clients will be protected, even though the COLA is lower than last year’s.
It’s important to note that other factors influence Medicare premiums. For example, in 2024, Medicare will cover the Alzheimer’s treatment Leqembi, which is expected to be one of the most expensive treatments covered by program. Experts estimate that coverage for Leqembi could add an additional $5 a month to Medicare premiums every month.
When Will the Latest COLA Take Effect?
Benefit checks dated January 2024 will begin to reflect the annual increase. For beneficiaries born the 1st through the 10th of the month, clients will receive their benefits on the second Wednesday of the month. Those born from the 11th through the 20th, the third Wednesday of the month. Finally, individuals born between the 21st and the 31st receive their benefits on the fourth Wednesday of the month.
Your clients should receive a letter in December providing specific benefit details. This information is also available on the Social Security website.
The COLA helps seniors when receiving Social Security benefits and paying Medicare premiums. By adding extra cushion to monthly benefit checks, seniors have more purchasing power. This also helps limit the effects that inflation has on the economy and the budgets of older Americans.
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