Law Does Not
Provide for a Social Security Cost-of-Living Adjustment for 2016
With consumer prices down over the past year, monthly Social
Security and Supplemental Security Income (SSI) benefits for nearly 65 million
Americans will not automatically increase in 2016.
The Social Security Act provides for an automatic increase
in Social Security and SSI benefits if there is an increase in inflation as
measured by the Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W). The period of consideration
includes the third quarter of the last year a cost-of-living adjustment (COLA)
was made to the third quarter of the current year. As determined by the Bureau of Labor
Statistics, there was no increase in the CPI-W from the third quarter of 2014
to the third quarter of 2015. Therefore,
under existing law, there can be no COLA in 2016.
Other adjustments that would normally take effect based on
changes in the national average wage index also will not take effect in January
2016. Since there is no COLA, the
statute also prohibits a change in the maximum amount of earnings subject to
the Social Security tax, as well as the retirement earnings test exempt
amounts. These amounts will remain
unchanged in 2016. The attached fact
sheet provides more information on 2016 Social Security and SSI changes.
The Department of Health and Human Services has not yet
announced Medicare premium changes for 2016.
Should there be an increase in the Medicare Part B premium, the law
contains a “hold harmless” provision that protects approximately 70 percent of
Social Security beneficiaries from paying a higher Part B premium, in order to
avoid reducing their net Social Security benefit. Those not protected include higher income
beneficiaries subject to an income-adjusted Part B premium and beneficiaries
newly entitled to Part B in 2016. In
addition, beneficiaries who have their Medicare Part B premiums paid by state
medical assistance programs will see no change in their Social Security
benefit. The state will be required to
pay any Medicare Part B premium increase.
For additional information, please go to www.socialsecurity.gov/cola.
2016 SOCIAL
SECURITY CHANGES
o Cost-of-Living
Adjustment (COLA):
Monthly Social
Security and Supplemental Security Income (SSI) benefits will not automatically
increase in 2016 as there was no increase in the Consumer Price Index (CPI-W)
from the third quarter of 2014 to the third quarter of 2015. Other important 2016 Social Security
information is as follows:
2015 2016
o Tax
Rate:
Employee 7.65% 7.65%
Self-Employed 15.30% 15.30%
NOTE:
The 7.65% tax rate is the combined rate for Social Security and
Medicare. The Social Security portion
(OASDI) is 6.20% on earnings up to the applicable taxable maximum amount (see
below). The Medicare portion (HI) is
1.45% on all earnings. Also, as of January 2013, individuals with earned income
of more than $200,000 ($250,000 for married couples filing jointly) pay an
additional 0.9 percent in Medicare
taxes. The tax rates shown above do not include
the 0.9 percent.
o Maximum
Taxable Earnings:
Social
Security (OASDI only)
$118,500 $118,500*
Medicare (HI only) N
o L i m i t
o Quarter
of Coverage: $1,220
$1,260
o Retirement Earnings Test Exempt Amounts:
Under full
retirement age $15,720/yr. $15,720/yr.*
($1,310/mo.) ($1,310/mo.)
NOTE: One dollar in benefits will be withheld for
every $2 in earnings above the limit.
The year an individual reaches full $41,880/yr. $41,880/yr.*
retirement age ($3,490/mo.) ($3,490/mo.)
NOTE: Applies only to earnings for
months prior to attaining full retirement age.
One dollar in benefits will be withheld for every $3 in earnings above
the limit.
There is no limit on earnings
beginning the month an individual attains full retirement age.
o Social
Security Disability Thresholds:
Substantial Gainful Activity (SGA)
Non-Blind $1,090/mo. $1,130/mo.
Blind $1,820/mo. $1,820/mo.*
Trial
Work Period (TWP) $ 780/mo. $ 810/mo.
o Maximum Social Security Benefit: Worker Retiring at Full Retirement Age:
$2,663/mo. $2,639/mo.**
o SSI
Federal Payment Standard:
Individual $ 733/mo. $ 733/mo.*
Couple $1,100/mo. $1,100/mo.*
o SSI
Resources Limits:
Individual $2,000 $2,000
Couple $3,000 $3,000
o SSI Student Exclusion:
Monthly
limit $1,780 $1,780*
Annual limit $7,180 $7,180*
o Estimated
Average Monthly Social Security Benefits Payable in January 2016:
All Retired Workers $1,341
Aged
Couple, Both Receiving Benefits $2,212
Widowed
Mother and Two Children $2,680
Aged
Widow(er) Alone $1,285
Disabled Worker,
Spouse and $1,983
One or More Children
All Disabled
Workers $1,166
* Because there is no COLA, by law these
amounts remain unchanged in 2016.
** A decrease in full maximum benefits
occurs when there is no COLA, but there is an increase in the national average
wage index.
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