Americans receiving Social Security are slated to see an increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2023 of 8.7%.
Federal benefit rates are increased when the cost-of-living rises. The Department of Labor’s Consumer Price Index (CPI) rises when inflation increases, leading to a higher cost-of-living. The cost-of-living adjustment (COLA) helps to offset higher prices, on average, for goods and services.
If you are over the age of 62 and have not yet claimed your Social Security benefit, you will not miss out on this COLA.
Cost-of-living adjustments (COLAs), including the 2023 COLA, automatically apply each year after one’s “official” primary insurance amount (PIA) is calculated at age 62. One does not need to claim early to get the benefits of the annual COLA. Adjust for the annual COLA is already part of the Social Security formula ensuring you do not lose the COLA if you wait to claim.
COLA notices will be mailed in December and starting in early December notices will be available online. You can access your own COLA notice securely online by using the Message Center in my Social Security Account.
In addition to the increase for Social Security, the Medicare Part B Premiums are scheduled to decrease in 2023. The standard monthly Medicare Part B premium for enrollees in 2022 was $170.10, this will be changing to $164.90 in 2023, resulting in a decrease of monthly premium payments by $5.20.
As a reminder the Medicare Part B premium covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A. Each year, the Medicare Part B premium, deductible, and coinsurance rates are determined according to the Social Security Act.
The 2022 premium had included a contingency margin to cover projected Part B spending for a new drug, Aduhelm. Lower-than-projected spending on both Aduhelm and other Part B items and services resulted in much larger reserves in the Part B account of the Supplementary Medical Insurance (SMI) Trust Fund, which can be used to limit future Part B premium increases. The decrease in the 2023 Part B premium aligns with the Centers for Medicare & Medicaid Services (CMS) recommendation in a May 2022 report that excess SMI reserves be passed along to people with Medicare Part B coverage.
While we are excited to communicate these new updates, we are not supplementing the above information as a recommendation or investment advice. If you have any questions about your particular situation, please reach out to the office, (203) 743-0131.